General Landlording & Rental Properties

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Landlord rights in regards to Military lease early termination

Posted Jun 27 2022, 11:18

I purchased my 1st investment property from REI Nation last year and a major selling point to me was that the average tenant staying for ~5.5 years. This morning, after ~1.5 years, I was informed my tenant is terminating the lease early, without penalty, because of a military transfer. I looked in the lease agreement and there is no language to support this move. However, there is apparently a federal law allowing for military transfers without penalty. I wish I was aware of this up front, as I would've thought twice about renting to someone who is likely to be relocated during the lease term.

Re-leasing the unit is going to require me to make any necessary repairs and pay one month's rent to the management company for finding a new tenant. In short, this early termination is likely going to wipe out my cash flow for the first year-and-a-half of the lease. It's a huge bummer to have both repair and re-leasing expenses this quickly.

As a landlord, what are my rights here?

- REI is saying the tenant is only responsible for this month's rent, but in my brief googling, it appears they are also responsible for next month's. Is that correct?

- To prevent this in the future, is it within my landlord rights to tell the management company to only lease to a civilian? I want to support the military, but also don't want to lose money on this investment, which will happen if I keep putting in tenants who are likely to get transfers.

I'm sure there are seasoned landlords who knew about this rule, but it had never been brought up to me; I was a little blindsided by the financial hit. Some of it may be recouped by a higher rental fee for a new lease, but it doesn't look like rental prices have increased significantly in the area.

@Chris Clothier, would you mind weighing in?

Oklahoma City, Oklahoma

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Tim Miller
  • Rental Property Investor
  • Laurel, MD
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Tim Miller
  • Rental Property Investor
  • Laurel, MD
Replied Jun 29 2022, 10:10

You basically said it yourself, you are a couch surfing landlord. You seen an ad for this fabulous "Turn Key" property and you didn't do any due diligence. Now the property isn't preforming as advertised due to a tenant moving out in 18 months. It's time to redo your numbers on this property and if you can't get them to work with a turn over every 12 months. I'd say it time to sell and get another property that will. But that will require you to do some work.

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Brian Larson
  • Investor
  • San Jose, CA
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Brian Larson
  • Investor
  • San Jose, CA
Replied Jun 29 2022, 11:31

Wow!  I am not going to even look at all the comments here.  This is accepted law.  You have no recourse.

Also, keep in mind that not everything in a contract can be enforced.  And also, that there are laws and rules outside of your lease that will impact your leasing contract.

Essentially, you should read up on some of these "pitfalls" for the future.

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Steven Westlake
  • Developer
  • Bellefontaine Ohio
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Steven Westlake
  • Developer
  • Bellefontaine Ohio
Replied Jun 29 2022, 12:25
Quote from @Dan Heuschele:

My market is San Diego which has a lot of military personnel.  Our tenant requirement prohibits applicants with more than 2 residences in the last 5 years, but we wave this requirement for military people.  We also are aware they can terminate their lease prior to lease end date.  We view military personnel as good tenants that are very reliable in paying their rent.  More important we want to support our military and recognize the sacrifices the military personnel have to make.

We currently have one unit that has 3 single military members as tenants.  They have been good tenants.  We have in the past had a military member tenant terminate their lease early (but they had been in the property for a few years, but we write each lease to expire in late spring or summer and they got transferred not at the lease end).

I would never consider not renting to military personnel simply because they got a transfer that did not align with the end of the lease.  The military personnel need housing. They may be required to place their lives at risk.  You are considering not renting to military personnel because they may get transferred.  This seems to be unsupportive of the military.

As has already been pointed out your underwriting seems very tight.  This early lease termination is not a huge item, yet it wipes out 1.5 years of cash flow.  What if your HVAC died prematurely?  What if you got unlucky and got hit by natural disasters in consecutive years.  We have experienced both of these and many other unexpected costly events.  Cash flow of $200/month is too tight for OOS managed properties.  

Good luck

Sorry the “camp Hollywood”, was a tongue in cheek joking name for San Diego military area, or camp Pendleton. Some times I forget it’s not something every one gets.

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Jonathan R McLaughlin
  • Rental Property Investor
  • Boston, Massachusetts (MA)
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Jonathan R McLaughlin
  • Rental Property Investor
  • Boston, Massachusetts (MA)
Replied Jun 29 2022, 14:17

@Corey M.

Not a fan of the turnkey model but seems @Chris Clothier was being responsible and accurate in reporting his average and median tenant stays.

Problem is assuming the average outcome is the probable outcome…that’s just wrong and on you.

To be fair, it is one of the most common misconceptions in real estate and elsewhere.

When I did some career counseling at a graduate School most of the young guys said “well I have to make at least the average.

Um, guys, you took math right?

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Replied Jun 29 2022, 14:41
Quote from @Jonathan R McLaughlin:

@Corey M.

Not a fan of the turnkey model but seems @Chris Clothier was being responsible and accurate in reporting his average and median tenant stays.

Problem is assuming the average outcome is the probable outcome…that’s just wrong and on you.

To be fair, it is one of the most common misconceptions in real estate and elsewhere.

When I did some career counseling at a graduate School most of the young guys said “well I have to make at least the average.

Um, guys, you took math right?


 I understand the average and can cover the vacancy, my question was more in regards to the surprise that a lease can be broken mid-term. I get that it's controversial because it involves the military, but it was a law I was unaware of. Hopefully the next tenant stays longer.

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Replied Jun 29 2022, 14:46
Quote from @Tim Miller:

You basically said it yourself, you are a couch surfing landlord. You seen an ad for this fabulous "Turn Key" property and you didn't do any due diligence. Now the property isn't preforming as advertised due to a tenant moving out in 18 months. It's time to redo your numbers on this property and if you can't get them to work with a turn over every 12 months. I'd say it time to sell and get another property that will. But that will require you to do some work.

I did a ton of due diligence and used a reputable company. The military rule is one that I assume most investors are unaware of unless they happen to be a landlord to someone in the military and the lease had to be broken. My question was more in terms of why the government doesn't cover landlords in this situation. In no way am I trying to take anything away from military personnel. I very much appreciate their service. But it does seem that if the government is forcing them to break a lease, then the government should make sure the personal who takes a financial hit is also covered.