First Duplex Questions

[Brandon Sarrett]

Hello, 

I am under contract on my first Duplex. I used an FHA loan but I am concerned about accepting rental payments into my personal bank account. Should I set up an LLC, open checking account in business, and use this for collecting rent and paying morgage/expenses?

Or should I wait until I refinance and transfer property to LLC? Supplimentally, Do you all reccomend any bank accounts where you can easily manage sub accounts within main account? AmEx or Discover?

Separately, I will be needing to raise rent for existing tenant to match market rates.  Any advice on how to do this would be helpful.  I have heard of the "Binder Strategy" of being super transparent.

Any suggestions are appreciated, Thank you!

#AskDavid

[Brittany Minocchi]

I think you're over-thinking the bank account...if you don't want to use the account you have now, you could open a new one strictly for collecting rent. Is the tenant month to month? If so, at least 30 days notice for the increase in rent is typical. If they're in an annual lease, you'll have to wait until they're up for renewal. 

[Brandon Sarrett]

Hello, 

The inhereted tenant is on a month to month lease for 760... and the Rentals in the area are going for 950-1200.

Does anyone have any reccomendations on how to have this conversation with the current tenant?

[Patrick Drury]

@Brandon Sarrett
Keep in mind just because the tenant is month-month and you can raise their rent doesn't mean they are going to pay it or can afford it. Also, I don't know anything about the property but if it's under rented it may not be in market rent condition. A unit renting for $700 probably can't go straight up to $1,200 overnight with no updates unless your property looks like the other ones in the area renting for $1,200 and offers similar finishes/ amenities. 

[Brandon Sarrett]

I totally agree Patrick.  Just aiming to get close to the 950 for now, then renovate during a turnover in a couple years.