How to raise rent when in lease
I offered a 4 year lease which has 2 years left and now I’m trying to get out of it with the least of problems. The tenant is excellent, they pay on time and keep the house in a good condition, except that I suspect they recently added a 2nd dog when the lease agreement has only 1 dog. The current lease is $1330/month including the 1 dog rent and similar units are getting rented for up to $1600/month for a more renovated unit and a pet rent of $50/month per pet. The lease agreement has a mistake in its phrasing that could be void the contract. Although I still need to consult with an expert in contract laws but the contract can be voided for having 2 contradicting phrases. And I don’t have prove the tenant has 2 dogs, but I can have witnesses who saw them and social media stories. I’m not sure how to proceed. Any ideas how to be able to increase rent?
#3 BRRRR - Buy, Rehab, Rent, Refinance, Repeat Contributor
- Investor
- Austin, TX
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#3 BRRRR - Buy, Rehab, Rent, Refinance, Repeat Contributor
- Investor
- Austin, TX
You must abide by the lease in place, and so should the tenants. If they are in violation you have good grounds to make changes. Consult an attorney on how to move forward.
#3 Managing Your Property Contributor
You need to follow the current lease. If they got a second dog, then they need to pay rent for the second dog at the same rate as dog #1.
#3 1031 Exchanges Contributor
- Investor
- Las Vegas, NV
Offer them $2,000 to move.
Don’t forget you’ll have a month of vacancy, a few thousand in make ready, etc etc. So the first year’s gains won’t go in your pocket. So make sure the next tenants are even better than current tenants or it’s a losing proposition. Especially if they move out after a year and you have the same expenses again. Then you’re two years in at higher rent but no more money in your pocket.
#1 Tenant Screening Contributor
- Property Manager
- Honolulu, HI
Aloha,
It is extremely rare that you can void an entire contract with contradictory phrases. More likely a Judge would nullify only those particular contradictory statements, or even keep the one that benefits the tenant more.
You state that the tenants "keep the house in good condition". What does your Rental Agreement state regarding "additional" pets? That is the action you need to take...informing them they are in violation based on (direct observation, photos, social media, etc) and have X days to correct (per local law and/or your Agreement). If your Rental Agreement states $X per animal, there is your answer for rent increase. If you didn't cover any of this in the Rental Agreement, the only thing left is reaching "mutual agreement".
Did you not include automatic "step ups" in the rent over a four year period? At a minimum there should have been an increase based on an estimated inflation figure, or actual CPI increase for that long of a term, otherwise what possible benefit is it to you? You cannot handcuff a tenant to the property, stuff happens and they move out. It is far better to have an annual conversation with them over renewal rate and term based on their then current intentions.
#5 General Landlording & Rental Properties Contributor
- Rental Property Investor
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#5 General Landlording & Rental Properties Contributor
- Rental Property Investor
- Los Angeles, CA
You don't need an expert in contract law, you just need common sense. No judge is going to void a lease two years into it for a phrasing mistake. Since this was YOUR lease and YOU had control over the wording, every single thing that is unclear or contradictory will be ruled in favor of the tenant. That is just common practice.
As for the second dog, you can try to get an eviction based on that or try to negotiate increased rent, but it's probably a lost cause. Five minutes of time and the dog becomes an ESA and you're screwed and have previously good tenants that are now unhappy with you.
Next time you're crazy enough to offer a four year lease, build in annual rent increases.
I feel its bad form on your part to try to void the lease or look for loopholes to void the lease. Especially for good tenants over only $300? Really??? You made the mistake of accepting a 4 year lease or if you just acquired the property, you are responsible for the terms you have accepted. This is a landlording learning experience. We all have been through them and they have cost us many thousands over the years. Don't try to squeeze good tenants in this way to make more money.
Quote from @Tim J.:
Why would you provide a 4 year lease? For a residence?
It was a rookie mistake, never again. At the time, I thought I could raise rent after the 1st year.
Quote from @Bill Brandt:I'm better off keeping lease as-is then.
Offer them $2,000 to move.
Don’t forget you’ll have a month of vacancy, a few thousand in make ready, etc etc. So the first year’s gains won’t go in your pocket. So make sure the next tenants are even better than current tenants or it’s a losing proposition. Especially if they move out after a year and you have the same expenses again. Then you’re two years in at higher rent but no more money in your pocket.
Quote from @Richard F.:
Aloha,
It is extremely rare that you can void an entire contract with contradictory phrases. More likely a Judge would nullify only those particular contradictory statements, or even keep the one that benefits the tenant more.
You state that the tenants "keep the house in good condition". What does your Rental Agreement state regarding "additional" pets? That is the action you need to take...informing them they are in violation based on (direct observation, photos, social media, etc) and have X days to correct (per local law and/or your Agreement). If your Rental Agreement states $X per animal, there is your answer for rent increase. If you didn't cover any of this in the Rental Agreement, the only thing left is reaching "mutual agreement".
Did you not include automatic "step ups" in the rent over a four year period? At a minimum there should have been an increase based on an estimated inflation figure, or actual CPI increase for that long of a term, otherwise what possible benefit is it to you? You cannot handcuff a tenant to the property, stuff happens and they move out. It is far better to have an annual conversation with them over renewal rate and term based on their then current intentions.
Aloha, the rent includes "pet rent" and the lease agreement specifies 1 dog only. So, the 2nd dog will need to be a on a mutual agreement to amend the lease agreement, the 2nd pet rent doesn't have to be necessairy as the 1st pet rent. I confronted the tenant but they denied the 2nd dog and said it's only there for "play dates". I didn't want to make the problem stickier, so I just told them that if they have a 2nd dog they should let me know to discuss it, because it's not part of the agreement.
The 4 year contract was a rookie mistake, at the time it was a the same tenant from 2 year lease and they asked for the 4 year contract and I thought I can increase rent after the first year with a 6-month notice. County law specifies that landlord is suppoed to offer 2-year lease unless there's a reason not to. Next time, I'm going to offer no more than 2 year lease and include automatic "step ups" as you mentioned.
Quote from @Greg M.:
You don't need an expert in contract law, you just need common sense. No judge is going to void a lease two years into it for a phrasing mistake. Since this was YOUR lease and YOU had control over the wording, every single thing that is unclear or contradictory will be ruled in favor of the tenant. That is just common practice.
As for the second dog, you can try to get an eviction based on that or try to negotiate increased rent, but it's probably a lost cause. Five minutes of time and the dog becomes an ESA and you're screwed and have previously good tenants that are now unhappy with you.
Next time you're crazy enough to offer a four year lease, build in annual rent increases.
Ok nevermind voiding the lease.
I tried to confront the tenant about the 2nd dog but they denied. I didn't want to take it further so I just reminded them it's not part of the agreement and we should discuss if they have a 2nd dog.
What's an ESA?
There will be no more 4 year lease.
Quote from @Chris B.:
I feel its bad form on your part to try to void the lease or look for loopholes to void the lease. Especially for good tenants over only $300? Really??? You made the mistake of accepting a 4 year lease or if you just acquired the property, you are responsible for the terms you have accepted. This is a landlording learning experience. We all have been through them and they have cost us many thousands over the years. Don't try to squeeze good tenants in this way to make more money.
I agree.
If you have a good tenant I wouldn't mess with it! You're rolling the dice if you lose them. I would prefer a good tenant paying less than a bad tenant paying more.
When it comes to real estate leases, the landlord's position is not one to be taken lightly. You must abide by the lease agreement in place and make sure that your tenants do too. If you suspect that certain stipulations are being violated, then you have good grounds to make changes. Before doing so however, it's important to consult with an attorney who can advise on how best to move forward. Raising rent when in a lease may seem like a simple solution but it needs careful handling and proper legal advice in order to protect both parties' interests. This can help ensure that everything is done correctly and without any nasty surprises down the line. After all, the last thing anyone wants is for their tenant relationships to turn sour!
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Ok nevermind voiding the lease.ESA = You need to learn more about being a landlord or get a Property Manger.I tried to confront the tenant about the 2nd dog but they denied. I didn't want to take it further so I just reminded them it's not part of the agreement and we should discuss if they have a 2nd dog.
What's an ESA?
There will be no more 4 year lease.
ESA stands for - Emotional Support Animal and this falls under Fair Housing.
You're in Montgomery, the biggest tenant friendly county in MD. You need to read up on all of their crazy regulations before you are brought into court by your tenant.
https://www.montgomerycountymd...
Good Luck.
@Ali BenAyed wait until lease is up and raise to market value.
Quote from @Ali BenAyed:
Quote from @Greg M.:
You don't need an expert in contract law, you just need common sense. No judge is going to void a lease two years into it for a phrasing mistake. Since this was YOUR lease and YOU had control over the wording, every single thing that is unclear or contradictory will be ruled in favor of the tenant. That is just common practice.
As for the second dog, you can try to get an eviction based on that or try to negotiate increased rent, but it's probably a lost cause. Five minutes of time and the dog becomes an ESA and you're screwed and have previously good tenants that are now unhappy with you.
Next time you're crazy enough to offer a four year lease, build in annual rent increases.
Ok nevermind voiding the lease.
I tried to confront the tenant about the 2nd dog but they denied. I didn't want to take it further so I just reminded them it's not part of the agreement and we should discuss if they have a 2nd dog.
What's an ESA?
There will be no more 4 year lease.
Note if market rent was $1650 as OP indicated with a pet and the PM charged 10% ($165/month), the OP would have been $155/month ahead of his self managing revenue.
If you are not going to manage properly, hire someone who will. It may actually save you money. It will reduce the chance of being sued.
Proper management includes setting rent appropriately, home inspections, being aware of the various tenant/LL regulations, dealing with contractors/maintenance. Proper PM is more than just collecting the rent.
@Ali BenAyed as others have said, you made a deal, now it’s time to stand by it. I will take a solid tenant that pays on time and takes care of the place any day. You may get more rent out of the next person, but they may not be as reliable. Take the win and leave it alone.