Taking over 4 tenants – best strategy for getting up to mkt rent?

[Ari Archer]

Hi–

I just bought my first rental property – a 4plex of 1/1s in the Vallejo, CA area. I'm inheriting 4 tenants, 3 of whom are month-to-month. I'm looking for the best way to get the 3 month-to-month tenants up to reasonable rents. There is no rent control. Should I offer them financial incentive to sign year leases? Should I get them on my leases instead of the previous landlord's?

Some background info:

• unit 1: $1150/mo – upper unit with view, some recent renovations. on year-long lease ending 11/17.
• unit 2: $775/mo – upper unit with view. month-to-month, tenant since 9/10.
• unit 3: $800/mo – lower unit. month-to-month, tenant since 7/14.
• unit 4: $775/mo – lower unit. month-to-month, tenant since 5/11.

unit 1 i'm happy with.

unit 2 looks like the biggest opportunity for raising rent. in it's current condition, it looks like i could get 875-950 for it. after some updating, i could get 1100-1350 for it.

units 3 and 4 could probably max out at 850. after improvements i could get ~1k/unit.

if they are good tenants i would like them to stay. i certainly appreciate the longevity. any advice would be greatly appreciated.

[Deanna McCormick]

Unit 2 raise to $895.00  in 6 months raise to 950.00

Unit 3 raise to 875.00

Unit 4 raise to 875.00 

3 & 4 in 6 mo raise another 50 to 75 bucks,without any improvements unless vacated. 

The first to go rehab and up to top market rate.

Keep them all on month to month. once you know your tenant base.. you have more control and then if you want to change lease terms you could consider it.  but for now I'd keep them all on month to month.

My family's had rentals over 50 years and now are mine,  we only have done month to month, at the most I would do is guarantee rent rate for 12 months at move in but month to month is way to train and keep your tenants trained. You think you have security with a year lease but in reality people will do what they want and leave, move, fight your terms, and in the end a month to month term with 60 day preferred notice is way to go....