Raising Rent after Purchasing Property

[Chad Chiles]

Does anyone have good strategies for raising rent on a property that is under rented once you purchase it?

I've come across multiple properties that I want to purchase that have leases signed out for over a year.  Can I change rent as a new owner or am I stuck for a year?

[Brad Jacobson]

Hey Chad,

If there is an active lease, it does carry with the property in a transaction.  There's no way to break the terms of an active lease and raise rents even if ownership changes.

Once the lease expires and the tenants go month-to-month, the rent can be renegotiated.

One trick I learned years ago was to add an automatic 5%/yr increase to the lease so then when the lease expires and the tenants go month-to-month, the rent automatically bumps up but I get to keep the good tenants in place.

Hopefully that helps a bit.  Good luck!