Inherited long term tenant: What would you do?

[Adam Fansler]

So what would you do?

I purchased a value-add, 4 unit in Columbus Ohio last year. The building was completely occupied with rents way below market. A few months after buying the property we submetered all the utilities charging them back to the tenants. My thoughts were to do light rehab and raise the rents as people moved out which is what I have done so far, however..... I have a tenant that has lived in the building 40 years !!! Market rents are 700 per month and the tenant is paying 485. The tenant pays a week early every month, picks up trash around the building, shovels the snow in the winter and never has any maintenance request. Obviously, I don't want the tenant to move, but their rent is really low.  Do I try to gradually get him to $700 a month with a 3-5% increase each year? This could take 10+ years. Or do I hit them with maybe a $50 increase each year? I have already increased the tenants cost 50-70 per month by charging back the utilities.

Thoughts????

Thanks!!

Adam

[Calvin Lipscomb]

Originally posted by @Adam Fansler:

So what would you do?

I purchased a value-add, 4 unit in Columbus Ohio last year. The building was completely occupied with rents way below market. A few months after buying the property we submetered all the utilities charging them back to the tenants. My thoughts were to do light rehab and raise the rents as people moved out which is what I have done so far, however..... I have a tenant that has lived in the building 40 years !!! Market rents are 700 per month and the tenant is paying 485. The tenant pays a week early every month, picks up trash around the building, shovels the snow in the winter and never has any maintenance request. Obviously, I don't want the tenant to move, but their rent is really low.  Do I try to gradually get him to $700 a month with a 3-5% increase each year? This could take 10+ years. Or do I hit them with maybe a $50 increase each year? I have already increased the tenants cost 50-70 per month by charging back the utilities.

Thoughts????

Thanks!!

Adam

 Starting with the numbers you need to quantify how much he is actually saving you.  How much would the snow removal cost you?  How much did you save by him making sure the area clean avoiding tickets?  What is the value of hassle free tenant?