Inheriting 4 tenants – strategy for getting up to market rent

[Ari Archer]

Hi–

I just bought my first rental property – a 4plex of 1/1s in the Vallejo, CA area. I'm inheriting 4 tenants, 3 of whom are month-to-month. I'm looking for the best way to get the 3 month-to-month tenants up to reasonable rents. There is no rent control. Should I offer them financial incentive to sign year leases? Should I get them on my leases instead of the previous landlord's?

Some background info:

• Unit 1: $1150/mo – upper unit with view, some recent renovations. on year-long lease ending 11/17.
• Unit 2: $775/mo – upper unit with view. month-to-month, tenant since 9/10.
• Unit 3: $800/mo – lower unit. month-to-month, tenant since 7/14.
• Unit 4: $775/mo – lower unit. month-to-month, tenant since 5/11.

Unit 1 i'm happy with.

Unit 2 looks like the biggest opportunity for raising rent. in it's current condition, it looks like i could get 875-950 for it. after some updating, i could get 1100-1350 for it.

Units 3 and 4 could probably max out at 850. after improvements i could get ~1k/unit.

If they are good tenants i would like them to stay. I certainly appreciate the longevity. any advice would be greatly appreciated.

[Drew Pak]

I have leased up properties where I have inherited tenants. 

I take a two staged approach normally depending on the landlord you want to be. 

1) Determine the "quality" of your tenants.  Are they paying on time, not causing issues and overall taking care of the unit. 

2) Determine the updates that need to be done to the units or the exterior. (ask the tenants what would make their living conditions better) This would be stated that we are going to be making improvements to the units and that once they are completed then we will be raising the rents slightly to adjust for the changes. 

3) Communicate to tenants and show them their alternatives (normally if you are at or close to market then the hassle of them moving will not will not be worth the 50-100 dollars extra that you are planning to charge)