Inheriting a tenant paying under market value

[Nicky Venditti]

I'm in contract for my first rental property in the Buffalo area and will be inheriting a tenant who is currently paying way under market value. Property is a side by side duplex (each unit is 900sq ft, 2bdrm/ 1ba) One unit is vacant and I plan to use it as a LTR, while the other unit is occupied by a tenant who is paying way below market value at $645/month and I would ideally be getting around $1200/month. I was told by my realtor that the tenant should not be surprised by a significant rent increase given the comps in the area are roughly double what he is currently paying. Per New York State guidelines, I will need to give a 90 day notice for rent increase, but beyond this I'm seeking any advice on best practice for broaching the topic with the tenant as a landlord. Thank you in advance for any insight! 

[Bill B.]

1) I would be surprised if the tenant isn’t surprised. Why in the world would they know what the comps are? Almost nobody knows the comps for their cell service, their car insurance, or their health care insurance.

2) make sure they are on MTM or when their lease expires, until there’s nothing you can do. 

3) find out the local/state requirement for notice to increase rent, maybe go even farther out to avoid a winter vacancy  

4) be financially prepared for the tenant to move out and spending thousands to make it ready for the next tenant while it’s vacant for a month or two (especially in the middle of the winter.)

5) be absolutely confident that you’re right about market ent so you don’t spend thousands lose rent to vacancy and possibly get a lower quality tenant to make an extra couple hundred per month. Or you won’t even break even by the time they move out and you start process over.