I looked at a 5 unit apartment complex today and the units are all 2 br 1 1/2 bath the are nice. 3 units are rented out and the fourth one is ready to be rented (just done with repairs) and if I bought the property I would live in the 5th unit. but my question is sence the current tenats have signed a 1 year contract is it possable to raise the rents durring this time, or do I have to wait untill the lease are renewed…Not that with me living in one unit I can contribute up to 900 month out of my poket but would prefure not to if at all possable…My goal with this property is to hold for retirment…
Here is a break down of the cost and income
mortgage insurance and taxes will run me about 2350 yes this is -250 but remeber I currently pay 900 so me contributing 250 is no big deal but if I can raise the rents to it would look like this
income 6504=2600 -2350=250 cash flow but I believe the FMV rent rate would be around 700 maybe even 750 can someone give any input
sorry so long but wanted to give some info so you understand the dalima…Thanks a bunch
This might differ state to state, but in florida you must honor the terms of the contract. You cant kick them out or raise rates unless they agree to it.
In most states you must honor the lease…
If it helps im in texas…And thanks for the reply
There are a ton of Texans in here so I’m sure you’ll get a good answer. I’m in Louisiana, hte land of parishes and archaic French real estate laws! Here, you must honor the lease…luckily, the tenant that I inherited has a lease that converted to month-to-month recently. I’m going to start raising the rent every 6 months until it is somewhere near market (it’s about $100 under market now…
You need to find out if it is just a contract to rent from Month to Month, which usually has a beginning date or is it an annual lease which will have a beginning date and an ending date.
Month to Month contract can get a rent increase with a minimum of 30 days notice. (ex: June 10, 2005 notice is mailed certified return receipt, rent goes up starting August 1, 2005)
Annual Lease, rent increase at the annual rental date.
Also make sure they don’t vacate and move “next door” if you increase the rent. This would be an economic question not a legal one and only you can answer that.
Hope this helps.
if you raise the rent by $100, you will probably lose all of your tennants. If you raise it $25, you will probably be ok. Also, you might want to wait and let your tennants get to know and trust you before you come walking in and start raising rents. I know i would be out the door if i was in that position. But i do understand where your coming from. Im in position to buy a 4plex and would love to raise the rent from 625 to 650, but dont want the present tennants to get pissed at me.
Take your time raising rents, you are in for the long haul. Check with the tenants and see if there is something that needs to be fixed in the units. Maybe offer to get their carpets cleaned for free or 50% off.
Do some minimal landscaping to improve the property. Then when you raise the rents, you ‘ve earned it in the tenants’ eyes.