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Updated 9 months ago,
Question About Raising Rent
Hello! I am curious to get feedback from everyone about this situation I have found myself in. I am currently under contract on a property that has 2 duplexes (4 units) and shop buildings on it. The seller of the property built them back in the 90's and paid in cash for them.
When running my numbers I got the current rates that he is charging, and they are 30-40% less than the fair market rent value in my area. He has two 3B 2.5B units rented out for $1,050 and $1,100, and 2B 2B units rented for $975 and $1,000 each month.
Based on my experience in my market the 3B 2.5B units should be renting for $1800-2000/mo and the 2B 2B units should go for $1300-1500/mo.
Tenants are currently on a month to month lease so raising rents won't be a problem, but how much would you raise it to?
Our contract states that I will give the current tenants 60 days notice from the day of closing that rents will be raising, but would it be too much of a jump to raise rents to $1600 for 3B units, and $1300 for 2B units? I figured I would give current tenants a better rate for a year, but if they decide to move then I'll market at the top rent rate. What are your thoughts?