How to raise rent on your tenant

[Tone Church]

My tenant is not on a lease with me. He had one with the previous owner of the property but I never established one with him. It has been 8 months since I bought the house. He is paying about $350/month below market rates ($1,200 vs $1,550 / month). What considerations or legal implications should I be thinking about before telling him his rent will be going up?

Also, am I required by New York state law to hold tenants deposit in escrow?

[Thomas S.]

This is very likely a tenant that will leave when presented with having to pay market rents. You could prolong your financial suffering and continue to supplement his rent but your best option would be to go directly to $1550 and stop losing money. A new tenant that can afford to pay that mush immediately would be a safer bet.

If you choose to raise his rent slowly he will eventually leave anyway so all you are doing is losing money till that happens.

Give proper notice that he will need to sign a new M2M lease at $1550 and let him decide. If he does stay win/win if not then move your business forward win/win.