Live In 4-unit with 3 units rented below market rate

[Ben Raptoulis]

Hello Bigger Pockets Community. I am currently working on moving into my first investment property, a 4-unit builiding with 3 currently occupied units each of which consist of 2 bedrooms. The current rents are easily below market value by at least 100-150$ per unit. I am debating raising each rental rate an additional 50$ when I occupy the property and also splitting the water bill (water bills that recieve water from Detroit Water Department are outragous due to many people not paying their bills.) I would love to continue to offer this service but with bill that ranges from 250-300$, that is an expense that I may have to split. Does anyone have any experience with raising rents and or splitting more bills after you become a live in landlord? Would you push the envelope immediatley or wait a bit and develop a strong relationship with the tennants?

[Alex Deacon]

@Ben Raptoulis I would suggest tread lightly especially your first time. Test out the tenants. if they are all good then I wouldnt rock the boat too much. if they are long term they will expect an increase but when you increase get ready for the whiners to come out. They will want new everything. You can then give them an option. "I only raised the rent $50 this year but if you want new carpet I can install it and then raise the rent $150. Which would you prefer."  I am going to bet they now dont think the carpet is all that bad. Think about this. one tenant moves because you raised the rent $150 and now you have to invest $2500to $5000  in carpet and paint and misc. Long term it works but are you ready to dish out 3k -5k right now?