All Forum Posts by: Connie Tang

@Connie Tang - You still need to tell us what the rents are before we can really offer guidance......$100 might be fine, or it might be outrageous....

Not really enough info.  The % increase varies greatly if current rent is $800 VS 1,600.  Also, market rent generally has homes that are freshly turned.  Some have gone through a lot of renovations to get them in "market" condition.  What is the condition of your units?  Are they "market" ready or are they 100 below market ready?  Two of them are updated and in excellent (I would say market) condition. The other one I would have to paint and get into a better, more updated shape.

What are you doing to verify they are good tenants?   You can ask them, you can ask sellers you can have them sign an estoppel etc but can you ever really know until you know?  I requested a rent roll/proof of timely-received rents. If they have been paying on time, then I consider that a very good start. I also met two of the 3 tenants at the showing and they seemed cool (though I know you can never judge a book by its cover); the cleanliness of everyone's units was encouraging.

You said you will be doing renovations and then added "within the next few years" and the items you mentioned are not necessarily things tenants care about.  Unless the roof is actively leaking they won't care at all. Part of the reason they don't care is because having a roof over their head is part of your job.  It is a requirement of rental housing. Tenants like and care about things like paint, flooring, kitchens, bathrooms, screens, doors, heat, ac, etc.  My point isn't to be a jerk here, it is great you have some renovations planned out just need to temper your expectations on how a tenant may feel differently.  Hey, want to raise your rent 100 a month so I can put a roof on the home isn't going to go over well.  I guess the roof isn't a good example. I don't think you are being a jerk. I need honest help and advice, so I need to hear it straight in order to gain knowledge and understand what is right vs. wrong, otherwise I can't learn. You are totally right about the roof; it's a basic necessity and tenants won't care about a new roof as long as it works properly. The units are all in pretty good shape (all have new flooring). There are definitely opportunities to renovate one of the units, so I'll have to take a closer look at what I can improve there. Another idea I have for adding value and justifying the rent is adding laundry to the basement after I clean it up. Currently, the tenants do not have access to the basement. I would love to build storage locker units for each individual unit and add a coin-op washer/dryer.

In my opinion the best approach is to have an honest conversation with yourself about the condition of the property from the tenants perspective.  If they moved out, would you do anything other then clean up a bit?  if the answer is all you would do is clean and you could attract a new tenant at 100 more a month, then okay, great.  Raise rent.  If the answer is I need to paint and change the floors etc then maybe the rent is proper for the condition.  I do think two of the units are in market condition; the other could use some updating. 

@Connie Tang it would depend on how much the current rents are.

Raising it $100 on somebody paying $3500 = no sweat

Raising it $100 on somebody paying $500 = begging for a vacancy

@Connie Tang agrees with @john Underwood with the 50 year assuming the rent is somewhere around the 1k mark. More than 5% is a little rough. Got it.

Go to rentometer and other sources and determine the fair market range. Feel free to share with the tenant that they are under market or the lower end of the range, and you are raising rents gradually out of courtesy since they have been good tenants. Yes, I have done the research and have a good understanding of the fair market range. I plan on doing exactly what you said...raising rents gradually etc.

SO much of doing this smoothly is doing it with the right tone…same action, different feelings produced. Absolutely. I want to do this with the utmost respect, professionalism, fairness, and diplomacy,

Do you want market rents or do you want to keep good paying tenants. I want a balance, which is good paying tenants paying rents that will generate some cash flow (I don't have to be at maximum cash flow; I understand it can take some time to get rents up to market). Having non-paying or troublesome tenants is my worst nightmare, but breaking even is also not an option.

After closing I would tell each tenant that you will be equating market rent prices.

I would see which tenants are the drama queens or pay late. 

I then would only raise rents 50 per month at most unless you are trying to run off a tenant. That's fair. Like I said, I have no idea what is too aggressive. I am a complete newbie getting into the REI world...learning, learning, learning!

It may be good to have a conversation with each one and show them what market rents are and what is available to rent nearby.

Then listen. You should get an idea what they think is fair and  what is affordable for them. Don't be greedy if you have great tenants in place already. Agree 100%. I'm definitely not trying to be greedy and the last thing I want is for tenants to think their landlord is greedy. Having great tenants is so important, but I really won't know until I take over the property, which is pretty scary.

Turnovers and repairs will cost you more than not getting full market rents. I take care of my good tenants that take care of me. That is very true.