Type of Lease and Rent Increase Advice for New Landlord

[Erika G.]

Hi all! I'll be closing on our first deal sometime this week. It's a duplex with one set of tenants that are on a yearly lease and the other is on a month-to-month. My question is if I should make the month to month sign a 12 month lease or keep them on a month to month. They've been renting there for about 2 years now but since the seller was thinking of selling she didn't want to have them sign a 12 month lease.

My other question is that the month to month tenant is currently paying about $300.00 under the current rent market. I think that if I raise their rent to the current market they won't be able to afford it and leave. My thoughts are to increase it by $150 for now or at most $200. Any thoughts?

[Thomas S.]

Get all your tenants on M2M to allow you more control. You want to be in control where as a lease puts the tenant in control. Much easier to terminate and work with a tenant and they will be more forthcoming with you when they have a M2M.

If your tenant can not afford a $300 increase why do you want to pay part of their rent out of your own pocket. Good tenants are a dime a dozen just replace them. Tell them it is going up $300 and if they leave find a higher quality tenant that is going to be happy in your place paying market rent. Never keep a tenant that does not want to pay or can not afford to pay market rent. It is very poor business practice to give away profits.