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Updated over 2 years ago, 04/10/2022
Inherited Tenants with Low Rents Question
I've got a package of 3 SFRs under contract. All 3 tenants have been in the houses for 10+ years and have not seen a rent increase since they moved in.
Current rent is $700
Market rent is $1000-$1050 after I go in and spend a total of $10,000 between all 3 units on cosmetic stuff.
From a financial point of view, it seems like a no-brainer to spend $10,000 to increase annual rental income by ($300x12x3 units) = $10,800. My initial thought before doing this math was to just increase rental income by $100/mo for year 1 and then again for year 2 and again for year 3 until I got to market rent.
My ultimate question is this...
Do I knock on their doors on the day of closing and present them with the new lease showing a $300/mo rental increase or do I gradually step it up?