First Triplex! Tenant questions.

[Chantz Ireland]

I just closed (8/18/15) on my first ever investment property which happens to be my first house as well. I bought a Triplex and plan on living in one of the units and renting out the other two. My father who has helped me through this entire process is a bit old school and is giving me some advice that I don't agree with and I would like to get a second opinion.

All the rents are $200 under market value and he insists that I do not raise them. I plan on renovating each one and raising the rents after. Is this okay? 

Second, The tenant in the middle unit has Christmas lights hanging from the house over to bushes for some reason and also has a punching bag in the front yard, It gives it a "Ghetto" feel  for me and I would like him to take his things inside. Would asking the tenant to move their things inside be over stepping the boundaries or am I in the right..?

[Brandon Hall]

@Chantz Ireland

I bought a triplex earlier this year with almost the exact same situation (except that I wasn't going to live in it).

My rents per unit were under market by $150 each. After consulting with attorneys to ensure my property manager and I were not violating laws pursuant to their leases with the previous owner, we raised rents to market. Tenants didn't move out (somewhat surprisingly). By not raising rents to market, you will generally have lower quality tenants, as lower quality tenants generally cannot afford higher rents. This inherently can lead to many headaches. Additionally, you ARE leaving money on the table. Never leave money on the table unless there is a really good reason to do so.

You are the new owner (and presumably the property manager) so you get to set the rules pursuant to your lease (assuming the old lease has expired and your state laws allow you to issue new leases). Make sure you consult an attorney and draft a solid lease. My lease doesn't allow anything to be stored outside. I want good curb appeal. Not only will it justify my higher rents, but it makes the neighborhood look nicer and allows (potentially) for other properties to attract higher quality tenants. My PM worked with my tenants are getting the yard cleaned up (which involved removing the Christmas lights for one of my tenants).

Set the rules up front. Be firm but fair and your tenants will respect you for it. Give them leeway, and they will take every inch they can get.