Updated over 5 years ago on . Most recent reply
Raising rents right away
We want to raise the prices $200 each on our duplex and via CraigsList Ads have found there is a demand.
Has anyone ever bought a place then raised rents immediately on the tenants?
Most Popular Reply
Just apply common sense. What I usually find when rent is 200 below market is usually a long term renter and/or the unit needs a lot of repairs and the previous owner was lazy in keeping it up to date. Obviously, you have to abide by existing terms of their lease. But if both are month to month, raise only one to market. Once that is signed, then raise the other. That will ensure you don't have two empty at the same time.
Not hard to do. The tenants know that their rent is below market. Just tell them that since you just bought, the numbers require you to raise rents. Usually there will be some repairs needed or upgrades that you can do as well that will help you stay on the good terms of the renters. You can also show them comps in the area that shows you are not personally targeting them.
Yes I agree that empty units kill cash flow. And when I was just starting out, I was very hesitant to do anything that might make a tenant move. But now that I own/manage 25 units in a rather rental demanding area, I try to keep up with market rents. Rents are moving so fast in Austin, I have a difficult time raising rents on excellent current tenants. However when they move I have little problem renting to market.
Last thing, If you buy a duplex and one side needs fixing up, raise the rents to where you want them. If they decide to move then upgrade unit and get market rates. I love keeping my properties the best on the street, and thus enabling me to be the one pushing rents in the area. Funny thing, when you increase rents you get better quality tenants as well. I have seen situations where market rents are 900 for a 2 bedroom 1 bath unit and the next door duplex is renting for $500 monthly. The tenant quality is low and the property is showing a lot of wear and tear. Poor tenants bring down the entire street. Cheers.