CLOSING ON MY FIRST MULTI-FAMILY RENTAL PROPERTY

[Kelvin Fernandez]

Hello everyone!

First ever post :)

I'm super excited to be closing on my first rental property on Monday and wanted some advice to prepare and start this new chapter as a landlord. Looking for some feedback or advice on my situation from any investor that is willing to pour into this real estate newbie :)

My scenario:

I will be purchasing a 4-unit property in Fall River Massachusetts: 1- 3 bedroom unit on the first floor, 1- 3 bedroom unit on the second and 2- 1 bedroom units on the third floor. At closing I will be inheriting 1 tenant on the second floor unit and another tenant in one of the 1-bedroom units on the third floor.

1. Both of these tenants have been paying rent way below market rent. The first tenant is paying $840 for a 3-bedroom unit and the second is paying $600 for a 1-bedroom unit on the third floor. I intent on increasing rents after closing but can anyone advise on how they go about increasing rents? What process do you find works for you specially when you are inheriting tenants and they have been so accustomed to lower rents? Should I increase rents on both tenants at the same time or should I increase one before the other? Also, any recommendations on average market rents in the area for a 3 and 1 bedroom unit?

2. Any tips to prepare for or after closing? I hear a good rule of thump is to change the locks on the day of closing. I will be living at the property so I will definitely be changing the locks to my unit but should I also change the locks in the common areas like the front entrance and back entrance to the property?

3. I will be opening a separate bank account for the property. Not sure if I should get a business account or a separate personal account. Thoughts?

Sorry I know this was a bit long but any advice or feedback would be greatly appreciated. Thank you in advance.

[Lien Vuong]

1. You should increase it with reflection of market rents but not to the actual market rent. Example: $800 when market is $1200 - you can raise to $950-1000. They would likely stay inside the units and you'll save money in turning over the unit again. Get them on a lease! 

2. Definitely change the locks for your personal unit and do a digital one for the exterior front and back door so as you change tenants it will be easy to switch it while providing security for the building.

3. Personal checking account is more than sufficient, business checking will make you pay for maintenance fees and offer no additional benefit to you. 

And lastly, CONGRATULATIONS!