Repositioning

[Johnny Kang]

If I'm buying a muti-family (5-10 units), what are the step by step process in repositioning a property so the rents are up to market rates? There's a property I've been looking at which needs a lot of work. Can I, as the new owner, raise rents on tenants with no leases immediately and ask them to leave (or evict) if they're not willing to pay the increased rate? 

[Karen P.]

@Blake NormanWhen we took over it was a whirlwind of activity with contractors and workers all over the place. The existing tenants either got very excited and happy or scared and left!  And yes, once we had a completed unit, an existing tenant would move out of their old apartment. We would end their old lease and start a new lease with my terms etc. It worked out really well, especially since the existing leases were awful handwritten ones.  And then we would start the rehab on their old unit.  It was musical tenants for awhile.  The whole atmosphere on the property is completely different now. The residents seem to really take pride in the building now and they all help keep it looking great. I stop in weekly and chat with people and keep my presence known.

But these distressed properties are the best deals to be looking for! Look for the sad properties that need an infusion of capital.  On our deal, the land lord didn't even have a rent roll.  She just wrote down on a piece of paper what she was getting for each unit. At that point, since I had done extensive market research, I knew we could really do great things with the property. Repositioning is a great way to add value.  I say all this to encourage you all. :) Don't be intimidated by a bit of hard work. It's worth it.  But like the others have said, there are many ways to achieve it.