Rent increase for 7 year old tenant

[Duane Hundley]

I’m purchasing a new property and the tenant as been there since 2010 and I’m sure hasn’t had an increase. He’s currently paying $300 and the property next door in same condition is currently for rent for $550. What would be a reasonable increase without running a good tenant away?

[Marcia Maynard]

I'd start by having a conversation with the tenant. Open and honest communication is best. The tenant is no doubt aware that they are paying under market prices and that the place will be sold. They probably have some fear as to their fate. So put them at ease. 

As soon as you acquire the property arrange to meet the tenants at their place. Introduce yourself and your management style. Let them look at your rental agreement with the monetary amounts blank. Then let them know you would like them to stay, and to transition over to your rental agreement as soon as possible, but a rent adjustment needs to be made. Ask them what they think would be fair rent and then ask them how much they can afford to pay. They will no doubt throw out a number above what they are currently paying, but still below market. Pause, and then let them know you will need to think about it. Then come back with a counter offer the next day. 

Everything is negotiable. See if you can get to a point that is a win-win. No one likes to be cornered. Treat them with respect and you are likely to get respect in return. If you win them over, they are likely to pay more to stay, not only so they won't have to move, but also because they may see you as a great landlord. Ask them if there is anything in the apartment/house that needs attention and tend to deferred maintenance right away. Tenants are more likely to feel good about staying if they know the landlord will keep the place well maintained, is approachable and is fair and kind. Good luck!