Lease Renewals for Triplex

[Jason Winter]

Hello BP Friends,

I have a 3 unit MF property in Philadelphia with all 3 units rented out. All 3 units are paying well below market. Unit 3 will be leaving in September when their lease ends so we will be able to increase the rent on that one.

Both leases for Units 1 and 2 have expired and are now month-to-month. 

Unit 2 was updated 2 years ago and is paying about $200 lower than median rent for the area.

Unit 1 needs work but is currently paying 44% of median rent for the area. (Can be a pain but never any real issues)

Both tenants in Units 1 and 2 are extremely easy. They both pay on time, every time and haven't had a single issue. 

We have 3 options for both units, and was hoping to get some feedback from this great community.

Option 1: Raise rents reasonably, keep the tenants and slowly increase rents over time.

Option 2: Raise rents a significant amount to bridge the gap between current and market rate. 

Option 3: Inform them, we are not going to renew their lease and pursue STR and MTR, which we already have some experience in.

Ideally our goal for these units is to transition to STR and MTR for all of these units.

Thanks,

Jason W