NJ: Inhereting Renters Paying Under Market Rent

[Brian Wolf]

Hello BP crew! I just got my first offer accepted on a nice little duplex that I'll be house hacking here in south Jersey. I will potentially be inheriting a renter, who signed a lease through Jan2021, who is currently paying $800. I believe this to already be below comps at about $900. Additionally, I would like to make some upgrades (Converting oil to gas heat & adding central air in the spring & switching to a more renter friendly experience via Cozy or some other portal are first primary upgrades) and believe that would also warrant a bump in rent. The current renter, a nurse, seems to be a very neat and organized renter, ideal! However, I need/want to make what the apartment deserves to bring in.

A couple thoughts I had, is raising rates right off the bat a bad idea for a newbie and is having a renter just more important to start? If raising rents is warranted, whats your thoughts on bumping to $850 initially for a 6 month lease, then raising to maybe $925 after A/C Cozy is implemented in the spring? Better to leave it $800 until after value is added? Would that larger eventual bump be more damaging? Last question is, will I be drawing up a new lease with the tenant either way or will I just inherit the lease they had setup?

Thank you all!

[Colleen F.]

Like @Andrew B. says you inherit the lease too, so you can't raise rent until January 2021.   It probably started in January so it may have been offered  a little lower mid-winter. You could delay the AC until the rent increase comes into play. The remaining upgrades may be welcome but not a big incentive to pay more. Are there two heating/AC  units? If there are you could get the work done but  not hook hers up for AC unless you have a rent increase agreement (assuming having the work done at the same time is more cost effective) .  If it is one HVAC unit you might want to wait to get it done.  I assume you are on the other side and you want AC. You should get an estoppel agreement on the lease terms (how much she has in deposit, end date etc).  As for the price increase I would wait and see what the market is when you renew, I also like spring renewals, more competition.