Finally have my first rental under con.. have questions!

[Zach Jones]

Gonna start by saying to just typed up a super detailed post explaining everything in my head, then I accidentally clicked the power button on this chromebook and deleted it all; so bare with me on the spark notes version of this.

Closing in January on my first investment prop.  A triplex local to me, built on 2006. Tenants in place, can keep or replace, pretty turnkey.  Got it with a conventional loan, 3.87 rate for 30 years.  With escrow, about 2240(about because I'm waiting on official ins quote) monthly with around 110k down.  (If you saw my last post, did a $ out refi to spare myself from Uncle Sam) .  Property appraised at about 417, got it for 405 with seller paying 10 in CC.  

As much as I don't wanna be the new guy to come in and raise rents.. current rents are way blow market at 1k, 1k, and 1100 and I've gotta them up a little. I'm wanting to raise it to $1325 upon renewal and most likely 1425 for new tenants. Both of those numbers would still make this the cheapest rental anywhere in this city or the city over. Cheapest currently is $1500 for a SFH. If all tenants renew, I'd be looking at roughly $20800 annually (not including 7% or so maint. Being an 06 build I don't expect anything too crazy) or a full ROI in just over 5 years. At the 1425 the Return goes down a whole year.

Now as a new LL, I know there are some things that need to be done. Such as an "intro letter" or "landlord letter".  Any advice on how to do this?  Is there a general transcript people use or is it better to have that "personal touch"?  Also, how soon do you let the tenant know of your intentions to raise the rent? Is it done in the initial letter or do you wait a month or two?  I think 60 days have to be given, before lease end.. am in Florida, if anyone knows.  How do you guys collect rent?  Checks/Deposits/Crypto? haha, I've been told the current tenants all pay on time but haven't yet heard front he current management company on HOW the actually pay it.  I've been told to steer clear of accepting cash but are there any way you would recommend over others?

What is the process of doing a quitclaim deed, and how quickly can that be done? The property was purchased in my personal name but I very much intend on it being in the Business ASAP for both tax reasons and not to mix my personal/rental finances. I have an appt this week to set up the bank account for the security deposits and the monthly rents. While on that subject, I'd like to put my primary residence under the LLC as well, if anyone has any advice on that.

I had several more questions that I'm blanking on but if/when I can think of them I'll post.  If anyone has any advice in the space of MF rentals I'd love to hear .  I don't have too many people in my life to discuss this stuff with so I'm very appreciative of the knowledge and experience a lot of people on this site provide, wish my original post didn't delete but it was about 3x longer then this so maybe it was for the best.  Thanks for the read and thanks in advance for any tips/advice you got for me!  

[Nathan Gesner]

Originally posted by @Zach Jones:

As much as I don't wanna be the new guy to come in and raise rents.. current rents are way blow market at 1k, 1k, and 1100 and I've gotta them up a little. I'm wanting to raise it to $1325 upon renewal and most likely 1425 for new tenants. Both of those numbers would still make this the cheapest rental anywhere in this city or the city over. Cheapest currently is $1500 for a SFH. If all tenants renew, I'd be looking at roughly $20800 annually (not including 7% or so maint. Being an 06 build I don't expect anything too crazy) or a full ROI in just over 5 years. At the 1425 the Return goes down a whole year.

Now as a new LL, I know there are some things that need to be done. Such as an "intro letter" or "landlord letter".  Any advice on how to do this?  Is there a general transcript people use or is it better to have that "personal touch"?  Also, how soon do you let the tenant know of your intentions to raise the rent? Is it done in the initial letter or do you wait a month or two?  I think 60 days have to be given, before lease end.. am in Florida, if anyone knows.  How do you guys collect rent?  Checks/Deposits/Crypto? haha, I've been told the current tenants all pay on time but haven't yet heard front he current management company on HOW the actually pay it.  I've been told to steer clear of accepting cash but are there any way you would recommend over others?

What is the process of doing a quitclaim deed, and how quickly can that be done? The property was purchased in my personal name but I very much intend on it being in the Business ASAP for both tax reasons and not to mix my personal/rental finances. I have an appt this week to set up the bank account for the security deposits and the monthly rents. While on that subject, I'd like to put my primary residence under the LLC as well, if anyone has any advice on that.

I had several more questions that I'm blanking on but if/when I can think of them I'll post.  If anyone has any advice in the space of MF rentals I'd love to hear .  I don't have too many people in my life to discuss this stuff with so I'm very appreciative of the knowledge and experience a lot of people on this site provide, wish my original post didn't delete but it was about 3x longer then this so maybe it was for the best.  Thanks for the read and thanks in advance for any tips/advice you got for me!  

1. Get over your "I don't want to be the bad guy" routine or you'll have a difficult time. You bought this for an investment and you need to run it like an investment, not a feel-good hippy commune where everyone's happy. Market rent is $1,500? Charge $1,500! Don't apologize, don't negotiate, don't raise it in increments over the next two years, or any of that nonsense. Be honest and fair with the tenants, but raise those rents. $300 a month below market costs you $3,600 a year. On three units, that's the price of a new roof in one year. Don't shoot yourself in the foot by supplementing the tenants' rent and shorting yourself or your family. When implementing large rent increases, I recommend you remove the current tenants and start fresh with renters you've screened and can train from the beginning. Existing tenants are more likely to resent you and cause problems, or they'll be unable to afford the increase (despite their best intentions) and get behind on rent.

2. Introduction letter does not have to be complicated. Introduce yourself as the new owner. Tell them where to pay rent and how to report maintenance or other questions/concerns. If they are on month-to-month leases and you intend to raise the rent, give them the new rent rates and when those go into effect. However, this is just a notice. You should have them sign actual leases at the time of renewal.

3. I just did Quit Claim deeds and transferred my properties to my LLCs and it was pretty simple once we figured out the first one. I estimate we spent a total of four hours on it for 12 properties.

If this was your "short version" then I suspect you tend to write long and this is a bad thing (I used to be guilty). If your explanations run long, people will zone out or get confused. Keep communication (verbal and written) short and professional. Instead of walking them through an apartment and explaining the value of a walk-in pantry or apologizing that the bedrooms are kind of small, keep quiet and let them figure things out on their own. Instead of a three-page list of instructions, give short bullet points and be prepared to answer questions for the few tenants that have them.

Good luck!