First time land lord with inherited tenants

[Matthew Gill]

Hi BP world!

I'm closing on my first duplex sometime in September. It belonged to my spouses aunt who passed away recently. The building was up for grabs and we decided we would purchase it as our first multi family property.Both units are three beds one bath on a large plot of land with a big fenced in backyard in a quiet residential area. The building will be coming with inherited tenants. They are nice enough people however they pay way less than the curent avaerge rental rate in my town. I live in Westbrook, Maine. The town sits just outside of Portland which is the largest city in Maine. The avergae rental rate for a three bed apartment is between $1400-$1800. They curently pay $950 with water and heat included. Id like some feedback on how to go about raising the rent and what I should make the tenants pay for.

[Nathan Gesner]

If the Tenants are under a lease agreement, you can't change the terms until that agreement expires.

If they are on a month-to-month agreement, you can raise the rent with proper notice. I believe your state requires 45 days notice but check state law to be sure.

My advice:

1. Always give notice in writing. Don't justify it or try to sell it to them. Be honest, polite, professional, and concise.

"Dear Tenant, please be aware we are increasing the rent rate on your apartment. The new rate will be $1,300 a month, starting October 1st. If you are unable to afford this increase, please provide written notice of your intent to vacate."

2. Do not increase the rent incrementally. Either the tenants can afford it or they can't. It's highly likely that they can't so you should make it easy on everyone by increasing rent to market rate, get the current renters out, and put someone in that can afford what it's worth.

3. Don't give them extra time to find another home because they'll only drag their feet, fight you, stop paying rent, or cause other problems. Give them the minimum time required by law and be done with it.

4. Be prepared to spend money on upgrades. When rents are low, you usually have lower-quality tenants. It may need new paint, flooring, and other repairs before you can get market rates.

5. Separate utilities from the rent. If you can't separate them, bump the rent up to cover the expense. I usually increase the utility charge 15 - 20% over the historic average because tenants tend to squander utilities when they don't personally pay the bills.