How to increase rent as a new landlord for a long-term tenant?

[Anran Wang]

Hi everyone,

I came across a rental house with good potential. The good part of it is, the long term tenant has lived there for over 9 years and they pay rent and are not likely to leave, but the downside of it is their rent is under the market value. There is probably not much for us to offer them. What should I do? How should I raise the rent to the market value so my number would work?

Thank you for any advice.

[Thomas S.]

When a new owner takes over it is the perfect time to raise rents to market as all tenants expect a rent increase with a new owner.

If there is a risk of the tenant leaving raise the rent to full market, you may get lucky and they will stay. If they decide to leave give them sufficient enough time, possibly 2 months, to allow you time to find a replacement tenant willing to pay market rent. Offering to let the tenant stay at their present rent for the two months will insure you have time to find a new tenant without a vacancy.

New owners have a ideal opportunity to raise rents without experiencing any vacancies assuming the place is move in ready, if not one months lost rent to rejuvenate the place after a 9 year tenant is well worth the cost.

Send the notice of rent increase and then sit down with them and work out the details if they decide to leave. Win/win