How to raise rents to tenant in multifamily?

[Imelda Mendoza]

We purchased a 5 multifamily in Corsicana, TX last year and have slowly updated a few of the units that have became vacant.  New rents for update ones are $775-$850.  We currently have 2 units that have not been updated and rents are at $550 & $770 both have been living there 3yrs+ with zero rate increase in the past 3 years.  

Do you mail out a letter? If so, any templates you recommend or do you call them?

Thanks in advance!

[Nathan Gesner]

Yes, send them a letter notifying them of the increase. There's no need to apologize! If you feel guilty, provide them a few comparable properties so they can see you are charing a fair market rate. A notice may look like:

"Dear Tenant,

This letter serves as notice that your rent will increase to $850.00 effective June 1, 2022. We are giving you one week to consider this change and notify us of your intent to renew or to terminate and vacate. If we do not hear back from you by [DATE] then we will serve you with notice of termination and expect you to move out."

One of your tenants would require a 50% increase to catch up. There's a very good chance they can't afford it, so I would not offer them a renewal. I would give them a termination notice, clean the place up, and find a new tenant that you have screened and confirmed they can afford the market rate.