Inheriting Long Term Tenants

[Natascha Bybee]

Sounds great, I know! But when they have been living there for 10+ years, are still paying half the market rent, and their unit is in desperate need of an update; how good is this situation really?

We are interested in purchasing two side by side 4-plexes that are all leased and everyone is currently paying. This feels like good news until we noticed that 5 of the 8 tenants are very long term, without a current lease, and paying way below market rent (<$300-$500 pm). Even with making the current updates, at market rental rates, these properties would have killer COCROI. Trouble is we would feel like complete scrooges taking away these people's long term homes; and although our state does not have rental increase restrictions, it would feel wrong to raise the rents $300 a month with 60 days notice. Not to mention it could piss them off enough that they stop paying altogether and won't leave. Are there any humane alternatives or do we just walk away from the deal?

[Matthew Irish-Jones]

@Natascha Bybee. It’s not inhuman to get a return on your investment.

Without investors making investments, caring for properties, and getting market rents for properties entire communities can fall into disrepair.

Every tenant has the freedom to pay a market rate,

Or chose to move to a more affordable location. They are not taking risk by spending money, they have no ties to the property financially, and they are not on the hook to a lender if the returns are not there.

The humane thing to do is be a good landlord.

Good landlords treat tenants with respect, give them plenty of notice on changes, make sure the property is habitable, and take care of maintenance issues quickly.