Seeking Advice on Handling Rent Increase Dilemma with Elderly Tenants

[Brandon Thurman]

Hello! 

I hope this message finds you all well. My wife and I recently acquired a 4-unit apartment building with inherited tenants, and I'm facing a bit of a dilemma that I'd appreciate some advice on.

Two of our tenants, both elderly ladies living alone, have been residing in the building for over 10 years. They've been paying a significantly below-market rent of $280/month. After assessing the condition of the apartments and the market rates in our town, we realized that we could potentially get $600-650/month or even more with some renovations.

In an effort to bring the rents closer to market value, we spoke with these two tenants individually and proposed a slight increase. One tenant's rent was increased to $400, and the other to $350. However, both tenants expressed that they could not afford any higher rent.

Now, we're stuck at a crossroads. On one hand, these two tenants have proven to be excellent renters who take great care of the property. On the other hand, there's a considerable potential income loss by not bringing in new tenants at higher rents.

I would greatly appreciate any advice or insights from the community on how best to handle this situation. Have any of you faced similar dilemmas, and if so, how did you navigate through them? Is it worth the potential income loss to retain these long-term, responsible tenants, or should we consider bringing in new tenants at the higher market rates?

Thank you in advance for your input!

- Brandon