Updated over 6 years ago on . Most recent reply
Raising Rents on Inherited Tenants
Hello! I will be closing on my first investment property (househack) in 2 weeks and I am looking for advice on raising rents on the inherited tenant on the other side of my duplex. Her rent is $1,000/mo and current market rents in the area suggest I could be getting $1,200-$1,300. She has lived in the unit for 9+ years and haven't had a rent raise in years (She has been signing 2 yr leases). I would like to raise her rent so that the numbers better work for my househack and I can live for free. (Her lease is currently mo to mo pending property sale). I was thinking about offering her $1,100/mo. This is still a good deal to her and an easy tenant and transition for me. I'd like to raise her rent but keep her in the property as an easy tenant to manage. If she doesn't agree I could then clean up the unit and advertise it for $1,250/mo. Any advice on how I should handle this? Thanks!
Most Popular Reply
Hey @Derek Jundt,
Part of your strategy is going to depend on how her lease is written and also what kind of laws are in place in your market. I know that in my market, the lease remains enforceable even with the property sale. So in this scenario, that would mean that you could only raise the rent when the lease is up for renewal.
If you can legally increase her rents at this point, then I think $100 is a good place to start. I personally would do $100 this year and then maybe consider a smaller increase next year. I'm a fan of working with inherited tenants as long as they are good tenants. Make ready expenses are some of the largest expenses outside of a cap-ex, so if you can do a smaller rent increase this year and not have to do a make-ready for a little longer then I personally think that's a win/win for everyone.