Originally posted by @James Wise:
Originally posted by @Garrett Blanchard:
In the process of purchasing a 6 unit complex and the rents have not been raised in years. 4 units are 2/1, one is 2/2 and one is 3/1. The rents are as follows...
2/1 - $425(been this price for 15 years), 2/1 - $600, 2/1 - $650(just raised due to new tenant), 2/1 - $500, 2/1 - $500 and 3/1 - $700(owners daughter lives in). the 2 bdrms should be 650-725 or possibly more and the 3 bdrm should be at least 850. None of the units have leases and are all month to month.
Question is... How do I go about raising the rents? Raise them all at once to where they should be and hope you don't get a bunch of 30 day notices? I was thinking about offering tenants the option of signing a lease at a lower amount and guarantee the rent not to be raised for that 1 year lease. If they don't want to do a lease, raise the rents say every 6 months until the rents are where they need to be?
When you're going up a small amount like this I recommend you do it slowly. Ya see to you and your bottom line the amount is low but to the tenants $200 or so is a lot and they can and often will simply move out. It's not going to provide you with a return if you run off 6 long term tenants then need to do 6 $5,000+ renovations to NET a few hundred more per month. Creating artificial turnover is never good.
What we like to do is sign everyone up to our leases at same rent as soon as we take over a building so evictions go smooth should we need to toss someone. Then at the next lease renewal we go up small amounts for the desirable tenants who don't create issues and higher amounts for the tenants who are more high maintenance and or pain in the asses.
The water and sewer was updated in the last 5 years to public w/s and due to the very little amount of homes on this public w/s line, the annual w/s bill is $5000/yr and will be for another 20 years until it is paid off! That is when all the rents should have gone up minimum of $100/unit, but the owner did nothing with rents. That is enough of reason for me as the new owner to raise the rents at least $100/mo on everyone that is below $550/mo.
