Fun Post: New Property Scenario

[Jordan Fiore]

Hey Everyone,

Just wanted to do another discussion post that could potentially give guidance to a lot of investors that are purchasing properties here in Cincinnati. It would be great for veteran investors to give their feedback on what they would do in this scenario.

We all know the housing market has been skyrocketing but there are a ton of properties that have longer term tenants that live there that are WELL BELOW market rent. As an investor taking on a property that has all units clearly under market rent, how would you go about this scenario?

Scenario:

You are taking on a 4 unit building with each unit currently rented at $500 but market rent is at $850! All tenants are currently month to month. Tenants have all been there between 3-10 years with a minor $50 rent increase just 6 months ago.

I would love to hear different approaches that one might make to this!

[Nathan Gesner]

Quote from @Jordan Fiore:

Hey Everyone,

Just wanted to do another discussion post that could potentially give guidance to a lot of investors that are purchasing properties here in Cincinnati. It would be great for veteran investors to give their feedback on what they would do in this scenario.

We all know the housing market has been skyrocketing but there are a ton of properties that have longer term tenants that live there that are WELL BELOW market rent. As an investor taking on a property that has all units clearly under market rent, how would you go about this scenario?

Scenario:

You are taking on a 4 unit building with each unit currently rented at $500 but market rent is at $850! All tenants are currently month to month. Tenants have all been there between 3-10 years with a minor $50 rent increase just 6 months ago.I would love to hear different approaches that one might make to this!

I estimate this question is asked and answered at least a dozen times everyday on bigger pockets. For experienced, seasoned investors, we would try to drop a contract that insured the units were vacant prior to purchase so we could immediately start with renovations and then rent it market rate. If the seller were unwilling / unable to do that, we would buy the property as is and deal with the tenants up on takeover.

most of us would recommend removing the tenants and placing new tenants at the higher rate rather than try to increase rent on the existing tenants.