BiggerPockets

I'm buying a new property. I'm remodeling the units and turning them into corporate rentals. All current tenants are on month to month leases.

How do I not renew the month to month leases for these good tenants? I thought about giving them each 2 months notice and then paying their moving expenses or something along those lines. How do I do this ethically?

Thanks for the feedback Mark. It's an idea I've vetted in another property I own down the street. I've been able to get over twice the normal rental rate and still come out profitably despite having to buy furniture and pay utilities because I'm cheaper than area extended stay hotels. The people who can afford my rates are usually homeowners themselves and so far, have taken care of my stuff (knock on wood)

The current tenants would be looking at a rent increase of the corporate rate minus utilities and furniture housewares and appliances depreciation.

I guess I could give them that option, but I appreciate the hard line approach. If it comes to that, then it does.

I just don't want to have to get into eviction because they neglected to look, so I was trying to think of a way to keep things pleasant and avoid all that, but I suppose uprooting someone from where they live is always just that.

Hi Bryan,

It may not be a true ethical question, but its pretty clear to me that I'm not going to be able to raise the rents and it have the same effect on revenue. They are currently paying $450. I know from my other property that I will be getting $1,500 per unit per month, easily.

Also, I'm sorry I wasn't thorough in the original question, the former landlord allowed the leases to expire and DEFAULT to month to month. This may or may not be top of mind to the tenants, so I was just trying to get creative suggestions on managing perceptions because its a small town, and I don't want anyone damaging the place as they move their stuff out. Paying moving expenses was only my first idea.

Well the tenant's lack of oversight in the lease structure is not your problem either. A lengthy notice process would seem more than sufficient to me. Paying their moving costs seems unreasonable unless there are other issues that haven't been brought up in the thread.

You could couple the lengthy notice period with an option for them to pay market rents at the end of the notice period. After shopping for other suitable space they may conclude that your deal is the best from a return on energy standpoint. To me that I what I would be focused on...how to possibly get the existing tenants to stay at market rates.

Can you live with them staying several months at current rates as part of your business plan? Giving them the chance to shop and see your deal may still work seems like the best approach to me.

60 day notice letter and explain in the letter that you are converting them to corporate leases. No concession, no further explanations required.

If you find another rental property for them, be sure to ask the landlord for a finder's fee. (Don't violate RE broker laws regarding commissions and such.)