Hi all - just checked out a possible rental property today for the first time. What an eye opener - didn’t know people really lived like that!
In any case, it’s a 4 unit building and the folks there have been there for 5 years or more (got this first hand since some of them where home). The residents are all month to month (at least one of which is a section 8). From the research I’ve done, the rents are below market and I’m wondering if it would be wise the raise the rent if I bought the place and whether it’s something you’d do at once (after giving 30 days notice) or raise over a period of time, etc.
Any advice is welcomed.
Thanks!
Dave
Check your state laws to see if there is a limit to how much you can raise the rent at one time. In any event, you will want to find out what kind of notice you must give the residents.
There are some things to consider here. Are the units in good enough shape to command market rent or would then need lots of rehab to get to that point? How far below market rent is the current rent?
If the rent is way below market and you could get quite a bit more than current rent, you can either try to raise it all at once (if your laws allow) or raise it gradually. If you raise it way up at one time, you might get the resident to move and then you could just re-rent at the higher amount (and you would be able to get in there and freshen it up).
I would agree with justin0419 and also mention that if the tenant that you will be raising the rent is the section 8 tenant you will need to check with your local section 8 agency. You may not be allowed to raise the rent for that tenant as they sometime “set” what the appropriate rent should be.
With section 8 you can raise the rent by $20 a year and they will give no problems. If they are not section 8 and the rent is significantly low like $100 or more I would evict as most leases have a clause where if the property is sold the lease ends. In Virginia I will buy a multifamily and jack everyones rent by $20 right off the bat. I have found that $20 bucks is a good number that is highly irritating to them but not enough to make them move.
Hooch,
By law, the lease survives a change in ownership. Even if the tenant is on a month-to-month lease, you still need to give them the appropriate notice (30 day notice or whatever is required in your state).
With section 8 you can raise the rent by $20 a year and they will give no problems.
That is factually incorrect. There are many factors that affect whether or not you will be granted a raise in rent by Section 8.
If they are not section 8 and the rent is significantly low like $100 or more I would evict as most leases have a clause where if the property is sold the lease ends.
You can’t evict someone for the rent being too low. That’s ridiculous and would be laughed out of court. If you’re not satisfied with the rent, at the expiration of the lease you can either raise the rent or give them the appropriate notice that their tenancy is terminated. Then, only if they fail to move (after being given the appropriate notice), can you evict them.
Mike
With section 8 you can raise the rent by $20 a year and they will give no problems.
That is factually incorrect. There are many factors that affect whether or not you will be granted a raise in rent by Section 8.
Here in Roanoke VA they will give no problems if the rent is raised every year by $15 to $20. Technically it is 3% per year. This year they sent a note to all section 8 landlords in Roanoke VA saying they will not allow raises more than 1.5% which would be $9.00 on a $600 rent. Here, they are desperate for section 8 landlords. With the simple threat that all properties will be taken off the program they quickly snapped back into line. Section 8 does have some guidelines but they negotiate as well. Including negotiation of rent prices if you have comparable rents in the area that are high. Here in Roanoke they try to play games of comparing a multifamily house to a projects apartment complex near by, or comparing it to a slumlord property managements rent rates which would never have been accepted on the program in the first place because they spend virtually no money on maintaining the home.
Higher property taxes, higher costs of maintenance, higher costs of building materials due to the upcoming hyper inflation, etc are all contributing factors. Any landlord who is not jacking the rent every year is a landlord who will quickly end up in the red. There is no need to let the government take advantage of you and it is not a big mystery of the factors involved in raising rent for section 8.
If they are not section 8 and the rent is significantly low like $100 or more I would evict as most leases have a clause where if the property is sold the lease ends.
You can't evict someone for the rent being too low. That's ridiculous and would be laughed out of court. If you're not satisfied with the rent, at the expiration of the lease you can either raise the rent or give them the appropriate notice that their tenancy is terminated. Then, only if they fail to move (after being given the appropriate notice), can you evict them.
It is ridiculous that you would assume that the reason I would evict would be because the rent is too low. I have lots of low income property and could find reasons in most of them to evict. 70% of them have boyfriends living there in an attempt to sucker the government into thinking it is just them and their kids so their income level looks low enough for the program. The reality is that most of them are parasites on the American tax payer and know every single way to work the system that there is.
Also, many of the houses I buy are either vacant and bombed out with squatters or from a landlord who is going under and they most often have let the place go to hell due to their lack of funds. Get the house condemned and they will be out in a couple of days max.