Prospective Tenant Want Me To Hold Property 1 Month Before Move-In

27 Replies

Hello all,

I'm relatively new to REI and getting ready to re-lease my first rental property after a 3 year tenant. My management company sent me an email stating they had a "very qualified applicant" for my property. The prospective tenant, however, doesn't want the lease to start until May 8th. There have been several other inquiries on the property. The management company said they typically require a $250 hold fee to hold the property, but as long as the tenants signs the lease/moves in, the $250 is credited towards the first month's rent (it defaults to me if they bail, but the mortgage is $830). That leaves me footing the mortgage for a month when I could only pay 1-2 weeks if a different tenant were approved. Is that standard practice? My instinct tells me to require a non-refundable 1/2 month to hold it but I don't want to scare the "very qualified" tenant away. It doesn't seem advantageous to me from a business sense to eat a month's mortgage if I don't have to. What would you do? TIA for any advice! RebeccaM

I would not hold a place for a month, period. Our market is hot enough I'm sure I could start today and find a tenant to move in before May 8.  Probably before Monday.  What's your market like?

If I do a hold, its only for a week or so.  And I require a fee equal to the deposit.  Its non-refundable and the tenant signs a form that says that multiple times in large letters.

Jon Holdman, Flying Phoenix LLC

Thanks Jon! My gut said the same thing but I wanted to make sure I wasn't making some giant newbie mistake. The rental market here is strong and the property is in great condition and 10min from downtown. 

I agree with Jon. They are asking you to LOSE money. If they want it that bad, have them pay the rent for the current month. If they are being held back by a lease, that is their issue..not yours. If they really want it and can afford it they need to sacrifice and pay rent on your property and where they are. It is always nice to help someone but at some point you have to put your interests first.

No company avatar mediumJohn Thedford, John Thedford | 239‑200‑5600 | http://www.capehomebuyers.com | FL Agent # BK3098153

We usually have a policy letting people hold the property for 2 weeks with a full deposit paid. That deposit is not refundable after 3 days and only about 75% is refundable after they put money down period. We sign agreement with them stating this so they know the money is not refundable if they back out. We also do not stop renting the property until we have this agreement signed and money in hand. We will continue taking applications even if they are scheduled to come in and bring the deposit because we never know if they will.

If they want to hold the unit longer than that and not move in we are fine with that but the lease must start 2 weeks after they put down the deposit meaning they must start paying rent.

We could not hold properties at all but moving is a difficult thing for our prospects and we feel giving people 2 weeks is enough to make them feel comfortable about applying rather than being worried someone is going to snatch the property from them before they are ready to sign the lease.

I realize you are working with a PM company but hopefully what we do can give you some guidance on your situation.

Medium apartment logoPhillip Syrios, Stewardship Investments | http://youtube.com/c/phillipsyrios | Podcast Guest on Show #121

I would gladly hold the property for the month as long as they pay the rent for the month in question.  That's how it works, the place costs $n per month.  Your property manager seems a bit confused.

"Very qualified applicant"  sometimes turns into a tenant you don't want.  There's plenty of 

"qualified applicants".

My big take away form all this is that I am left wondering about your property manager now ...

Thanks everyone. I'm reassured you all agree. And I also agree, Tony Gunter, about our PM. They are what I would consider very "tenant friendly". I battled with them about numerous items with the last tenant. I've have to essentially re-write this lease this go round to make sure I'm protected. May be time to revisit the PM.

Might be time to interview some PM's. There are some tools on the site to help with that. PM's don't have skin in the game. If the tenets wreck your place they won't be helping pay to fix it. It always come back to the investor having to do good due diligence on everyone we work with. I have concluded some of the best advice I have picked up from the site is build a good team. That is what makes REI work and profitable.

I will never hold ever again even one day. Even this last past month I got screwed! I have a first come first approved/completed policy!

This is a business, I have had people pay rent when they haven't occupied right away but I will never hold again!

@Rebecca Mickler "hold" is probably the wrong word. I will consider the home rented as long as the lease is signed and the security deposit is paid. Sometimes there is a vacancy between tenants, but I try to keep it minimal, no more than two weeks if I can, and it's often just a few days. However, we are already at April 9th. It seems reasonable that anyone looking at the house today wouldn't want to move for 30 days. It would be a red flag to me if they did need to move in faster than that, and I would want to know the reason they are moving so quickly. That's why I try to show homes when the previous people are still living there, so there is no vacancy in between. How long has your home been on the market? 

Medium buysellinvest.2Dawn Brenengen, Trailwood Realty, LLC | 919‑840‑8692 | http://www.trailwoodrealty.com | Podcast Guest on Show #101

I had something like this happen, as a newbie landlord, the very first time I rented the other half of my duplex.  It was one week before Sept. 1st of that year, but they wouldn't be moving in until Oct. 1st.

We agreed the lease would start on Sept. 15th.  They were moving from out of state and overnighted me the signed lease with the security deposit, that equaled one month's rent.  They also understood the security deposit was non-refundable.

The arrangement worked great!  They had a place waiting for them when they got into town and I had my first set of tenants nailed down.  They paid first month's rent when they arrived and were great tenants for me for over a year.  Then they moved when they bought their own house, literally around the corner, lol. 

Originally posted by @Rebecca Mickler :

Thanks Jon! My gut said the same thing but I wanted to make sure I wasn't making some giant newbie mistake. The rental market here is strong and the property is in great condition and 10min from downtown. 

 Two totally and diametrically opposed thoughts depending on how hot your market is.

1) if your market is hot then there is no way I'd hold a place for a month and I'd be getting a new PM since they wanted you to lose a month's rent to get a very qualified tenant.  Those tenants typically buy within a year or two.  You want someone who can qualify and will likely stay for a 3 or more years. 

2) If your market is normal then most likely you would be getting a lease starting on 1 May.  So you wouldn't be losing all that much.  In fact, I'd tell them I can hold it only until the first.  But in any event I'd take a full month's rent as a holding fee which becomes a security deposit once they pay 1st month's rent.  

Thanks everyone for all the advice! To update, I talked extensively with my PM about the situation.  They said they always continue to list and show the property up and until move-in day regardless of a "hold" in case something falls through. They do however have to let any other prospective applicants know there is an application on the property if  asked. So after some back and forth, I agreed to a hold with a full month's rent as deposit and a lease date May 1. If another applicant is approved between now and then, the hold applicant has the option to sign the lease immediately to secure the property or withdraw and receive a refund. If the hold applicant just decides for some reason they're no longer interested, they receive a refund less a $40/day charge from the time the hold began. Waiting to hear back from the applicant. I would have liked to move forward with a no hold policy, but my husband is more conservative and made the "bird in the hand" argument. So we'll see how it goes! Thanks again everyone! BP has proven to be invaluable to me in many areas as I grow this business!

@Rebecca Mickler

I would have doubts about a property management company that actually presents this scenario to me.  In my opinion, a good one would already handle this inquiry themselves.

The only way I would agree to holding the property for a month, is in exchange for a reservation fee that equals one months rent.  :)

I'd fire the property management company for even suggesting that!  Seems like they are lazy and don't want to search for tenants any more.  Ask your PM company if they want to cover the rent that you'd be losing out on.  I'd think not.

I would not hold the property for a month. My answer to the prospective tenant would be, "well, when you get ready to move check back with me. If it's still available you can apply then."  If they are "very qualified" and they like the place so much, they should have the means to pay the month's rent to hold it.

On another note, I see that phrase "tenant friendly property manager" quite a bit on here and that concerns me. As a real estate licensee your PM has established an agency relationship with you. That means he/she has a fiduciary responsibility to look out for your interests first.

That doesn't mean that the PM can treat the tenant unfairly or dishonestly, and they certainly have a duty of care to the tenant regarding health/safety and  livability issues. But no PM should put the interests of the tenant before the interests of the owner when it comes to an issue like this.

Originally posted by @Dawn Brenengen :

@Rebecca Mickler "hold" is probably the wrong word. I will consider the home rented as long as the lease is signed and the security deposit is paid. Sometimes there is a vacancy between tenants, but I try to keep it minimal, no more than two weeks if I can, and it's often just a few days. However, we are already at April 9th. It seems reasonable that anyone looking at the house today wouldn't want to move for 30 days. It would be a red flag to me if they did need to move in faster than that, and I would want to know the reason they are moving so quickly. That's why I try to show homes when the previous people are still living there, so there is no vacancy in between. How long has your home been on the market? 

 I agree with Dawn as far as I would expect a good tenant to have to give 30 days notice where they are, and if they're ready to move in tomorrow, something's wrong - unless - they have just relocated for a job or for college.

But, I'd definitely get a month's deposit from them and a signed contract.  This way, if they bail, you've got rent for that month.  Granted, if they stay, you'll have to refund that deposit and you would have lost rent for that month.

What I've done for some tenants is split the difference with them.

But, a tenant who needs to give 30 days notice where they are before they can move into your place, is a tenant who will honor you with proper notice, too.  If you only rent to people who can move in tomorrow, you'll have a lot of problems - unless they're all professionals who just relocated for a great new job :-)

And I don't think it's reasonable to expect them to pay rent at two places at the same time  - not for the full month.  They'll just go find another landlord, and you'll have to hope you find another applicant who is a professional or a student who has just moved to town, and that' the reason they can move into your unit tomorrow.

At least, that was my experience renting 25 units.

Ever think there is a reason some people property managers and have never become owners? Because they make foolish decisions such as "holding" a place.

Hi @Sue K. & @Dawn Brenengen

I do agree that a desirable tenant would give 30 days notice before moving out and I can appreciate that.  I made the offer to them that they could put up a month's rent to "hold" the property and then credit that towards their security deposit.  I did stipulate that if another applicant was approved the hold applicant would have the option of signing & securing the lease right away or getting a full refund. They would only lose money if they backed out without cause. They haven't responded to my offer yet so I may have alienated them, but I felt like it was fair without overextending my position.

Originally posted by @Rebecca Mickler :

Hi @Sue Kelly & @Dawn Brenengen

I do agree that a desirable tenant would give 30 days notice before moving out and I can appreciate that.  I made the offer to them that they could put up a month's rent to "hold" the property and then credit that towards their security deposit.  I did stipulate that if another applicant was approved the hold applicant would have the option of signing & securing the lease right away or getting a full refund. They would only lose money if they backed out without cause. They haven't responded to my offer yet so I may have alienated them, but I felt like it was fair without overextending my position.

 I'm sorry, I am confused about what you mean by "signing and securing the lease."

Are you saying that they would pay you a month's rent to hold the property (which would be credited toward their deposit) - but that you will continue to look for another tenant who could move in sooner?  And if you do, you just give them their money back?

Or you won't even give them their money back unless they start paying rent immediately?  What would be a reason to back out "without cause?"

If this is what you're saying, I can't imagine them agreeing with that.  There would be no security in a situation like that.  I wouldn't agree with it. I'd say, never mind and keep looking.

But, maybe I'm misunderstanding?

I think it's really important to think in terms of what kind of a deal would be appealing to you.  Put yourself in their shoes.  Would you agree to an offer like that?  

Again, if I'm completely reading this wrong, never mind.

Originally posted by @Dale Stevens :

Ever think there is a reason some people property managers and have never become owners? Because they make foolish decisions such as "holding" a place.

 Well, it's foolish to hurry and put in a tenant who is available to move in tomorrow, from my experience as a manager.  

When the real estate market crashed, we ended up with a 20% vacancy rate overnight.  Tenants lost their jobs and had to move out.  The owner I worked for panicked and told me to "lower my standards."  So, I did.  And we ended up with major problems and kicking people out, and money was spent fixing damage, there were losses that would never get collected on, and our good tenants were getting ready to move out.

He told me we better go back to my original criteria.  I said, "Good idea" :-)

Bad tenants are expensive.  They can be much more expensive than one month's lost rent spent to find a good tenant.


Hi @Sue K.

No that's not what I'm saying. This prospect wanted to hold the property but didn't want the lease to start until May 8 (which at the time is close to five weeks out). I'd rather not leave the property vacant that long if I have to. My PM said it's common to continue to show a rental up until a tenant moves in in case the agreement falls through. They take back up applications. If another applicant was approved on April 15, for example, the hold tenant would get the option to sign starting April 15. If they chose not to, they would get their full deposit back and the new applicant could have the house. 

By back out without cause, I mean maybe they're still looking around for a place and find something they like better. During the hold, my PM has had to disclose there's already an application approved on the property (which might deter other potential renters from even applying). So if they back out just b/c they change their mind, they only receive a portion of their deposit back to reimburse me for the "hold".

In my mind, if they really wanted the house, they would have put a deposit down and signed the lease for a reasonable time out like 2-3 weeks. Asking me to hold it for 5 weeks with no collateral rather than securing the house by putting down a month's rent leaves me wondering what's holding them back (and if they're still looking for something else).

Originally posted by @Rebecca Mickler :

Hi @Sue Kelly

No that's not what I'm saying. This prospect wanted to hold the property but didn't want the lease to start until May 8 (which at the time is close to five weeks out). I'd rather not leave the property vacant that long if I have to. My PM said it's common to continue to show a rental up until a tenant moves in in case the agreement falls through. They take back up applications. If another applicant was approved on April 15, for example, the hold tenant would get the option to sign starting April 15. If they chose not to, they would get their full deposit back and the new applicant could have the house. 

By back out without cause, I mean maybe they're still looking around for a place and find something they like better. During the hold, my PM has had to disclose there's already an application approved on the property (which might deter other potential renters from even applying). So if they back out just b/c they change their mind, they only receive a portion of their deposit back to reimburse me for the "hold".

In my mind, if they really wanted the house, they would have put a deposit down and signed the lease for a reasonable time out like 2-3 weeks. Asking me to hold it for 5 weeks with no collateral rather than securing the house by putting down a month's rent leaves me wondering what's holding them back (and if they're still looking for something else).

 Well, I did understand what you were saying then.  You're saying, sure, I'll take your deposit money now, knowing you don't want to move in and start paying rent until May 8th.  And I'm still going to look for someone else who wants to move in sooner.  If I do, you will have to start paying rent immediately or start looking for somewhere else, instead of May 8th.  And if you decide you want to look for somewhere that will give you a solid move-in date of May 8th, I will tell you that's not a good reason to back out of letting me keep you on the hook, and I'll keep some of your deposit for the time I "held" the unit while continuing to look for someone else.

If you are still looking for another applicant, you are not "holding" it.  You're trying to have your cake and eat it, too.

I'd be really surprised if these applicants accepted that deal.  These are people who are trying to plan ahead, and you're not offering them anything solid they can depend on.

Well, maybe you'll get lucky.  It's a gamble.  There's no guarantee you'll find another good tenant who can move in sooner than May 8th.  But, I hope you do.