Taking over commercial building with current tenants

[Bryant Blackwelder]

Hey everyone! I am buying a triplex and commercial building today through Owner Finance! I am hoping the triplex tenants will be gone soon, but the commercial building has tenants that have been there for the last 20 years and have been on a month to month basis for several years now. They are paying $450 in a 660 sq ft building and they have two businesses in there. Now in Maryville, TN the average rent now for that sq ft is $800 a month. I was talking to the person I am buying them from and he said he hasn’t raised the rent because he has only done the bare minimum lately but it needs to be raised.

Asking what would/ should I do in this case as this is my first commercial building

[Nathan Gesner]

Buy the property, then notify the tenants that you intend to increase the rent. If they can't/won't accept the increase, they'll move on and you'll find someone else.

I don't play around with incremental rent increases stretched out over time. Rip it like a bandaid. If they have been there 20 years, they are probably decent tenants. In that case, I may determine market rates and raise them to 90% of that as a reward. So if rent should be $800, I may bump them to $700 or $725. That should be enough of a savings to prevent them from the cost of moving and probably paying more at the next place.