New Landlord with tenants in place question!

[Ebenezer D Grant]

Hi BP Family,

So I just closed on my first multi unit deal with two tenants in place, one of the tenants has been there for a long time and the previous owner never took security and last from them.  They are on a month to month with no previous lease.  On top of that, their current rent is a little below market.  I plan on raising the rents a little.  My question is, can I demand a security deposit from them to protect myself in case they damage the apt. when they move out or should I adjust the rent accordingly because of no security? 

Thanks in Advance

Eb

[Amanda G.]

Hi Ebenezer,

Are they good tenants- is the place in good shape? If so, you could talk with them about putting them on a lease, getting an amount up front towards the deposit and then (if they can't do the full amount) making the first x payments increases their security deposit until you hit the full amount. what's in it for them? a new property manager who is paying attention to the property, and security knowing they have a place for the full term of the lease. I also write automatic increases into my leases. I'd start with saying "hey, we need to put a deposit on the place with the new lease", start at the full amount and make yourself look good by taking a bit less than that and doing the monthly increase method for the rest.