Increasing the rental as a new owner

[Xin Peng]

Hi, I'm under the impression that as a new owner, it's easier to (vacate the tenants and) do a renovation and/or increase the rental, wondering why. Is it because usually the lease agreements were signed with previous owner, so the new owner is not subject to those terms?

[James Alderman]

The new owner must respect any existing leases that the tenants had with the previous owner by law. I wouldn't say that it is any easier as a new owner. It may be that a long-term tenant is leasing below the market rate because the previous owner did not raise the rent in accordance to the market (which may be the case if they are a great tenant!). 

Before purchasing any property, do your due diligence: review any existing leases for the inherited tenants and make sure that everything is in writing prior to closing.