Question about fully occupied 4-plex

[Moti Bariso]

I found a four-plex that I like and thinking of putting in an offer but it is fully occupied currently. The current owners live out of state and are looking to sell it. All of the current tenants are on a month to month but they’ve all been there for a while. Newest tenant is 2 years. From what I see they all seem like good tenants but the issue I’m having is that the current landlord is charging quite a bit under market ($200-$250). Similar units in the area go for $1250+ and they’re charging $925. If I do end up buying, I want to increase the rent to match current market. What is the right approach? Do I buy then give the tenants option on whether they want to stay with the rent increase?

[Jonathan Greene]

It's great that they are on month-to-month and almost all multi acquisitions will have underperforming rents which is where you get the value add. You want to listen to Episode 448 of the BP Podcast with Dion McNeeley. It is the best strategy for increasing rent with existing tenants that I've heard. We've used it effectively since then as well.