Raising the Rent on Long Term Inherited Tenant

[Frank Jennings]

I purchased a duplex 1.5 years ago. We did some rehab which involved new brick work on the exterior and a new deck. This was so we could replace garage door lintels, which was mandated by the borough. This was paid for by the seller as a price reduction and done by me after the sale.

I told the tenants the price was going to go up due to this rehab. Even though I essentially didn't pay for it just overseeing it was a lot of work and I felt that the property was worth more rent afterwards anyways. Then one tenant moved out and I told the other tenant that we would let the market decide how much the new rent should be.

The tenant is paying $860 a month and it looks like I'm going to get $1100 a month on the other side. Both sides are basically the same except I put some new baseboards down and fresh paint on the vacant side living/dining room.

I just don't know exactly what to charge for the remaining tenant's rent. The tenant always pays on time and never has parties and is very quiet. Model behavior.

But what is fair to him, me, and the new tenant???? I honestly don't know what would be fair everybody. I would appreciate your thoughts and if you have direct experience even better!! Thank you!

[Greg M.]

Quote from @Frank Jennings:

Could I raise it by $125/month 2 years in a row instead of $250/month at 1 time? Is that unfair to the other tenant and do I get into an unfair housing situation then? 

Do not do this. The tenant either can/can't afford the market rate. If they can pay market, you just screwed yourself out of money by underpricing it the first year. If they can't pay market, you just screwed yourself out of money by underpricing it the first year and the tenant left.

Given they are a good tenant and there would be turnover cost, I'd probably price it $1025-$1050.