Looking to purchase a rental, not sure how to raise rent...

[Mandi Martinez]

Hello all! First let me ask that you don't bite my head off, I'm new to REI. I have done two flips but would like to purchase a multi- family unit. I have found a duplex but it is currently occupied and both tenants are paying way below market for rent.

What is the right way to go about raising the rent to market value? I’d like to know my options before jumping in.

[Gary David]

I was in the same boat and used this letter and gave them 30 days to make a choice. Just copy and paste it into Word and make it your own. I also added a line if they wanted to terminate their tenancy as a option (Everyone stayed !) Mine were all month to month. mine when up between 75-100 a month if your are really low you could offer lease options with step up in rents over a year or two if they commit to a longer term lease  

Lease Renewal Decision Form

Date ___/___/___

Dear ______________________,

Thank you for your tenancy at _____________________________! We’ve really appreciated having you here this past year and look forward to continuing our relationship with you. It is a privilege to be able to work with you and we thank you for your business.

According to our records, it appears that your lease-term is coming up at the end of next month and, as such, we need to discuss your future plans with you and make sure we are all on the same page. Due to naturally increasing expenses for the owner, it is necessary to gradually increase rent over time. Therefore, a slight bump in your monthly rental rate will take place soon. However, we would like your input on where to go from here.

Please choose from one of the following options for your future at your home. Simply circle the option below you would like to choose, and send this form back to us. We will prepare a new lease with the proper information and mail it to you within seven days.

Sign a new one-year lease at $________ per month, which will begin on __________ and end on __________. This is an increase of $________ per month.

Sign a new six-month lease at $________ per month, which will begin on __________ and end on __________. This is an increase of $________ per month.

Sign a month-to-month lease agreement at $________ per month, which will begin on __________. This is an increase of $________ per month.

Although we hope you’ll stay with us forever, if you do not plan on renewing your lease and staying with us any longer, please let us know immediately. Our state law requires tenants to give ____ days written notice to vacate before the end of their lease. Therefore, please return this form and let us know your plans by ___________ so we can make plans that work for everyone.

Once again, thank you for your residency here at [address or apartment complex name]; we look forward to many more years of working with you.

Sincerely,

Management