Spend $10k to increase rent $125/month to $1250?

[Marco G.]

I have an inherited tenant lease that is expiring at the end of Feb. They were at market when I purchased, but property needs major rehab to re-lease. I estimate $9-$11k including make ready, lost rent, and lease fee. Whenever they leave I'll have to incur these costs. Do I increase rent (I have a reasonable expectation they will leave, as they've been struggling last few months per mgmt co/slightly late rent), or leave it the same until they leave? As a side note, I'm still trying to pay down non-mortgage acquisition debt, meaning I'd take on more debt to accomplish this. Rents moved up quite a bit in the past year where this unit is located, over 10%.

[Thomas S.]

Defiantly increase the rent. If they stay great but if they are leaving anyway the sooner the better. Get it done and re rented asap. Wasting time is costing you more money having below market rent on top of the expected reno costs.

Make plans now and you should be able to complete the work and re rent with only one lost months rent.

As soon as they give notice start advertising and indicate reno work will be completed prior to move in.