Investment Properties Under Rented

[Lorenzo Prieto]

Hello, 

I'm searching for my first investment property and I've noticed a few properties on the MLS state the property has had long time tenants and the units are all under rented. I'm curious on how to approach this when buying an investment property that is currently under rented. I understand in order to cash flow I would need to increase rent however I'm hesitant to immediately jack up the rent. My thoughts would be to do some minor renovations and find new tenants if current tenants do not want to pay the rent. Any thoughts/comments would be appreciated. Thank you!

[Jaron Walling]

@Lorenzo Prieto If you're new to REI and don't have PM experience I'd tread lightly on deals like that. The idea of buying, renovating, and increasing rent with existing tenants sounds great but in real life it's a challenge.

You'll experience push back because most people are unwilling to except change. They won't sign a new lease, they won't accept higher rents, and they can't make electronic payments. Be ready for some really dumb excuses. Most people living in under rented properties are accustomed to that cost of living. Any of this could lead to an eviction. For these reasons it's risky and I'd avoid it unless you have a team supporting you including agents, investor friends, real estate lawyer, etc.