Updated almost 6 years ago on . Most recent reply
Raising Rents on a New investment.
If you are about to purchase an investment property as a long term buy and hold and the current rents are below market, what would you do? Would you ask the current owner to bring the rents up to market value before closing? Would you raise the rents immediately after purchasing the property? you might risk loosing the existing tenants and there are laws about how much you can raise the rent by? Or have done something else that has worked for you in the past?
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#3 Managing Your Property Contributor
If the current tenants have a lease with a fixed term, you can't do anything until that lease is up for renewal. If they are month to month, you need to give them appropriate notice (usually 30-60 days, depending on the lease and location; some areas it is 90 days).
Yes there are laws in some areas that limit how much you can increase the rent by.
How much below market are the rents and what are the rents? Increase rent by $100 is different when the rent is $500 a month vs $2000 a month.
Vacancy results in a lot of money being lost, so an increase of $50 on a $1000 place where you have a month of vacancy, isn't going to do much in the short term. Gradually raising the rent by $25 every year is unlikely to result in a vacancy.