Rental Property Investor · Houston, TX · Member since 2014 · 12 posts · 5 votes
I rented my first property starting in February of 2014 and we are coming up on the end of the lease. 1 of the tenants has notified me that he is going to move out at the end of the lease, but the other 2 want to stay. They are currently looking for a new person to take his spot, and it looks like they are going to fill out an application.
My question is, if this person is acceptable and we let him move in and have the 3 sign another year lease, how do we handle the deposit for the tenant moving out and the one moving in? This is probably a very basic question, but I am new to this so any help is appreciated.
Will you be renewing the existing lease? Or will you be signing a new contract?
If there will be changes in those signing the contract, I'll assume you plan to sign a new contract.
That being the case, my recommendation would be to return the security deposit on the completed lease and collect a new security deposit on the new lease. You probably also want to do a walk-through of the unit prior to returning the deposit to ensure that there is no damage that you should be collecting for (you don't want the new guy to be paying for damage done before he arrived).
I'm not an attorney (nor am I a tremendously experience landlord), so take that for what it's worth...
Will you be renewing the existing lease? Or will you be signing a new contract?
If there will be changes in those signing the contract, I'll assume you plan to sign a new contract.
That being the case, my recommendation would be to return the security deposit on the completed lease and collect a new security deposit on the new lease. You probably also want to do a walk-through of the unit prior to returning the deposit to ensure that there is no damage that you should be collecting for (you don't want the new guy to be paying for damage done before he arrived).
I'm not an attorney (nor am I a tremendously experience landlord), so take that for what it's worth...
SOunds to me like you have a roomate situation going on? I generally rent to couples/families Etc. I do have 1 3 bedroom houser that I rent to 3 roomates. the benefit is I can collect more on a monthly basis then I would from a family but it does come with it's own headaches as well.
regarding security, I have each individual sign their own lease and pay their own security deposit based on their rent. When 1 moves out security gets returned and newn tenant signs lease and pays their own security...
It can be a bit cumbersome but I have worked out a good system to where i am comfortable.
@J Scott Thank you for the response. I am planning on signing a new year lease with the 3 people (2 original and 1 new). So your advice sounds like the way to go.
@Steve Babiak adds a great point. The last thing you want is a year from now having them say oh those damages were caused by tenant who is exiting the lease next month. Basically end one contract completely and begin a new contract.
@Chris Masons I'm curious as to how you handle your roommates. Is each roommate on a separate lease agreement? What if the other two decide that they don't want another roommate, do they still pay the entire rent split between the two, or do they each have their own rent amount (1/3 of the total rent) for which they are responsible, or are the roommates responsible for the entire rent regardless of how many live there?
Each roomate is responsible for their 1/3 so I have a 3 bedroom apt. each tenant pays 700 and has their own lease. I require two months written notice should 1 tenant decide to move. I have never gone a month with less then the 3 roomates and have owned this property since 2007.
Not to say it's a perfect system but I definitely cash flow much better this way using 3 roomates VS a family.