Updated over 6 years ago on . Most recent reply
New Single Family Rental Dilemma - Tenant on a month to month
Purchased a new single family rental 3B\2B in North Texas. The tenant is currently on a month to month lease and their family has been renting the property for the last 8 years. Here is the dilemma - They are paying WAY below market rents as the old owner never increased rent for the past 8 years. Currently paying $1200\month but market is between $1750\$1800 per month. They have improved the property over the years with paint, flooring, fixtures, etc.. and have been a solid tenant.
Thoughts on whether to give them a discounted increase for 12 months or push for full market rates out the gate. All-in expenses are $1360\month. New to BP - Thanks in advance.
Most Popular Reply
My philosophy with inherited tenants is always to raise rent just under what it would be if the unit was fully updated. If they stay, (they are still getting a good deal) you get almost market rent with no rehab cost. If they leave, you can rehab and rent it at FULL market to the next tenant. Its a win-win.