I manage a property for a colleague of mine, who is interested in selling the property. In February, the long term tenants agreed to buy the house for a discounted rate because no commissions are involved. However, they're dragging their feet acquiring the financing. I'm going to be sending them a 60 day notice (30 days is all the M2M lease requires) letting them know that the rent is going up 33% as of July 1. I will also let them know that the original terms of the deal are still valid until July 1. After that date if a written sales agreement isn't entered into by both parties, the terms will be renegotiated.

I imagine they aren't going to be happy about it, but it will either (a) light a fire under them to obtain financing or (b) cause them to move out, which would enable the house to be put on market.

I'm not in a rent control area, so does anybody see any potential problems with such a hefty increase?

Of course, I've gotten the owner's approval about this move. He's anxious to sell because he's losing money month after month.

Seems a little harsh considering you're trying to win them over as a buyer. If it were me, I'd go straight to the non-renewal of lease rather than upping the rent.

Before doing that, if you're going to hire a Realtor to sell, I'd go ahead and hire the agent with the stipulation that no commission be owed if current tenant buys property. Then I'd have that agent put his/her sign on the property with a "Coming Soon" rider.

Seeing a sign in the yard will hurry the tenants up softly, then you give them the deadline for their offer, and the 30-day notice all at once.

In future, you have to put a drop dead date on any real estate dealings.

I don't like selling with a tenant in place, and that tenant is going to be ticked off and very unlikely to be cooperative. It will be a lot easier to sell with that tenant gone.

Unless you are laps and never raise tenants rent, they will put up a fight even with a minimal rent increase.

As investors with knowledge WHY WoULD YOU DISCOUNT BECAUSE OF NO COMMISION?

I really dislike seeing landlords do huge rental increases. All it tends to do is get people riled up and then news stations/papers and politicians to start screwing over all the landlords with new rules for limiting increases to small amounts and make landlords pay the tenants moving costs (several thousand dollars).

My exact thought was what Plenty said above lol.

What happens come July 1 and they don't move out AND they don't pay the increase though? Did you (are you) giving them a "respond by [date] with your intentions"?

I would ... give them the three options (purchase, stay with increase or leave) but they have to tell you what they plan on doing no later than June 1st.