Keep Tenant or Get Him Out

Member since 2019 · 144 posts · 46 votes

I have a MFU in Austell, GA which is managed by a PM. One tenant is paying $400 below market rent, he is often late for rent, and has returned checks. He is paying the least amount of all of the tenants. His lease is up for renewal and I was thinking to raise it $400 to reflect market value and he will leave and I can get in a new tenant. However, the PM is saying that it is better to only raise his rent $250 (he still may leave) so we can keep him in there and not have to remodel and have a vacancy. This is all new to me so I'd love to hear your opinions as you all are much more experienced. TIA

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Justin Hammerle

Realtor · Providence, RI · Member since 2022 · 404 posts · 262 votes

My vote is to raise it to market by $400 if you think you can get it. That's a lot of lost income, and for a tenant that has a bad record likely better to get a more qualified tenant in there anyway. how much to remodel the unit? Is the $400/mo increase contingent on the remodel?

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Dave SpoonerPro Member
Rental Property Investor · Cincinnati, OH · Member since 2020 · 869 posts · 823 votes
3y
Definitely raise the rent $400 or above and find a new tenant. Being late that much is a headache.
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Tommy Parker
Property Manager · Charlotte, NC · Member since 2022 · 269 posts · 135 votes
3y
Raise it by $400 and let go of that tenant.
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Michele Velazquez
OP
Member since 2019 · 144 posts · 46 votes
3y
Quote from @Michael Dumler:

@Michele Velazquez, they're trying to sway you because they don't want to deal with the process of acquiring a new tenant. Even though that's their job, it's much easier/less of a hassle for them to manage the existing tenant. As unfortunate as it sounds, this is why many investors claim that you have to manage your property manager.

I sent you a message about maybe working together
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Michael Dumler
Real Estate Agent · Atlanta, GA · Member since 2020 · 1k+ posts · 1k+ votes
3y
@Michele Velazquez, thanks! Please shoot me an email or text for better communication (contact info is listed in my bio).
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Michael Kuznetz
Member since 2023 · 11 posts · 4 votes
3y
Quote from @Michele Velazquez:

Quote from @Michael Dumler:

@Michele Velazquez, they're trying to sway you because they don't want to deal with the process of acquiring a new tenant. Even though that's their job, it's much easier/less of a hassle for them to manage the existing tenant. As unfortunate as it sounds, this is why many investors claim that you have to manage your property manager.

That makes sense. I am so grateful to have you all to get advice from because that is what we were thinking but wasn't sure what their motive was. I am scared they won't even do their job good and find a tenant.

Hi Michele,
Sounds like you should be looking for a new property manager if you don't have faith that they will do their job properly. I would think a solid manager would be giving you very different advice.
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Melanie ThomasBusiness Member
Real Estate Broker · San Antonio · Member since 2022 · 1k+ posts · 489 votes
3y
Get rid of the tenant, make it ready and get market value. That's a ton down the drain. Good luck & happy investing!
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Aaron Louis
Member since 2019 · 3 posts · 2 votes
3y
I have rentals in that area as well and have been in this situation before. Having gone through both options I will 9/10 times go with keeping the current tenant.
The process of asking a tenant to move out has a chance of leading to non payment of rent. This can turn into a 3 month hold over with no rent at all. Then once the tenant moves out you will have the cost of refreshing the unit/unexpected repairs and loss of rent. Best case from my experience your looking at a 6 month window of zero rent + repair costs. Of course the tenant could leave on time and return the unit in perfect condition, but I have not had the best experience with that.
My first plan of action would be to have a good conversation with the tenant. I would also continue to stay below market and go up $250 on the rent like pm says. Show your tenant that you are keeping rent below market to help them and in return you would appreciate the same respect and have rent paid on time.
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Lawrence Rutkowski
San Antonio, TX · Member since 2013 · 87 posts · 42 votes
3y
What are your goals for the property? What is your financial situation like? The optimal solution is to get rid of this problem tenant, perform the necessary repairs/updates, and get a quality tenant at market rent. $400/below is very questionable for a great tenant, let alone a garbage one. I operate in NY and TX, but I assume the rules in GA are somewhat similar. It'll be faster to rid yourself of him via a non-renewal than what seems like an inevitable eviction for nonpayment.

**Just saw this was 4 months ago. I hope everything worked out for you!
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