Should I raise the Rent

[Terry Williams]

This is going to be my first real estate investment and after running the numbers I have noticed that if I don’t (A) Raise the rent on the tenant that has been there for 7 years or (B) get the home for cheaper then they counter offered. I will be negative 500$ on the monthly cash flow.

The property is a duplex. The top unit is a 1 bed 1 bath and the tenant pays 500 a month. The downstairs unit is a 2 bed 1 bath and a basement. The tenants in that unit pay 750 and have been there for years.

The home has minor upgrades and is truly outdated. My plan is to upgrade the upstairs unit first and try to get 800 a month out of it and then maybe try to upgrade the downstairs and raise their rent to 900 or 1000

I don’t want to walk away from the deal because I feel that eventually I can make profit from the deal if I can get the rents raised on both units.

[Byron Scott]

Hey @Terry Williams.

I wouldn't count on the raise in rent too much especially if you don't have the experience in rehabbing. I would look toward what the lower side of the market is demanding for those type units to be conservative. You don't want to get in a situation where you are loosing money every month because you can't get those rents. I think you should look at your numbers and see whats the lost you can offer and not pay too much for the property. I know as a newbie sometimes you just want to get started but its also important to purchase right especially in a topping market like we are in now. The biggerpockets calculator is a good place to help you run the numbers. Its under to tool tab. Good luck!