Raising rent fair or unfair to this ideal tenant?!

[Kyle Falkenstein]

I am getting ready to purchase this duplex for the intention of hacking to get out of debt from my early 20’s. The current tenant in there has been in there for 15 years! She’s sweet, kind, doesn’t complain much and really takes care of the place cleanliness wise. Unfortunately, she said she was moving out to a 1 story since she’s starting to have trouble with stairs. The previous landlords have kept her at market rent from when she moved in ($695) which is another reason I was fine with closing on this place because I could bump the rent up to market value ($950-$995) in my area. Now that closing is right around the corner, she’s changed her mind again and decided she wants to stay now. Now I’m faced with a dilemma. Slowly increase her rent over the years which defeats our purpose of house hacking or bump it up to market value and put the ball in her court to see if she still wants to stay? I’m leaning towards meeting in the middle and doing $850 to see if she takes it or leaves it which would still allow me to pay slightly below the rent value of what she’s paying to pay off my CC debt faster and still save for Cap Ex, maintenance costs and all that set aside but I won’t cash flow at all till I move out and have both sides rented.

What is everyone’s thoughts or advice?

[Jill F.]

It's really not about what's "fair", it's about what is a good business decision. In this case, since you relied on her stated plan to move, when making your offer, I wouldn't feel bad to tell her okay but you have to raise the rent. HOWEVER, since you are house hacking, it may be advantageous for you to complete your side and rent it before you lose her as a tenant, especially if both sides needs reno before you can achieve market rents. It may be that she hadn't really looked at properties and didn't realize what market rent was when she told you she planned to move. So it might be a win-win if she stays for a bit while she locates an all one level place and you have time to reno the other side