inherited 85 year old tenant but rent is way below market

[Ray Reed]

Hello BP,

I recently closed on a 5 unit property where all of the units are way below market.  With the current rents I am operating at a $200 monthly deficit. All of the residents are on month to month leases and this is not a rent controlled town.  I consulted with my attorney on the proposed increases for August 1.  He states my increases were 'extremely reasonable'.  Here is my dilemma.  One of the residents is 85 years old  and on a fixed income.  She is paying $800 for a one bedroom apartment where the market rent is $1350 (heat included).  My units include heat but i am in the process of separating them.  The other one bedrooms i was thinking of going from $850 to $1050 with tenants paying heat.  I know she would not be able to afford that increase and still pay her heat and other bills. I believe she said her social security and pension are slightly above $1K.  she informed me that the prior owner told her she most likely would have to move but do i want to be that guy?

Curious to hear your inputs.

Thanks in advance 

[Derrick E.]

I'm on the other side of this. I would raise the rent of the other places and leave hers how it is for the time being. I fully believe in karma. This might not be a charity, but this is also an opportunity to help someone out. If she moves out you will eat the cost of rent for a month and have to do repairs before re-renting it. 

What's chances of the others moving out? Can you handle 2-3 of them going vacant at the same time? 

Maybe tell her you plan to raise it next spring, giving her more time to figure something out? Obviously you can't eat that cost for forever, but I'd def work with her as much as possible.