I am a partner in a beachfront rental condo that I rent to a full-time tenant. He's been great, very professional, but he plans to move out in the next few months, but that means I will have to rent the unit in the fall or winter.
The unit is under market rent (rents have increased considerably in the last year or so). My thought is to increase the rent closer to market since we are now month to month. Rent is $1495, market is maybe $1800.
I plan to send this to him, what do you think?
"We have been very happy with everything and would like you to stay for as long as you like. The only issue for us is the timing of when you go.
As you can imagine, it will probably take longer to lease a beachfront condo in the fall or winter than the summer. As I mentioned before, if you had decided to sign a 1 year lease, we would have kept the rent the same.
So maybe what we can do is continue the month to month, but at a rent that is closer to the market rent. We don't need to go all the way to market rent, which is something like $1800, but maybe what we can do is $1650."
Any thoughts from experienced landlords out there?
That is a perfectly reasonable response.
I think the current tone of the letter is unneeded.
Does the current lease say that it automatically ends at X date or does it say that it goes month-to-month after that?
Has the tenant given an official move-out date?
With the letter negotiating price, you sound like you're selling a car. :-) You'll increase your chance that he'll just move out if you raise the rent an extreme amount.
Wording things like "if you had decided to sign a 1 year lease, we would have kept the rent the same," sounds accusing and is a turn-off.
Just simply draft a generic letter with a few options. Write professionally, not like you're speaking to him...and definitely not basically telling him it's his fault the rent went up.
1. Month-to-month for $X
2. 1year renewal for $X
3. End current lease with move-out date of X.
I live in Michigan and all my leases end in late spring and early summer.
Trying to rent in the off season or winter in my case can be a few months or more of vacancy.
I just had a tenant that wanted to go month to month until the fall in case she wanted to change jobs.
I simply said, "I only do yearly leases and understand if you need to move."
She waited 1 day then renewed her lease for another year.
I wasn't so bold in the beginning.
Now I realize I'm not being bold now just stating my yearly lease policy.
Of course it may be different on places that are hard to rent.
Let us know how it works out for you.
@jeff t if your unit is on the beach why not put it on a vacation rental site like Vrbo and rent it weekly until you can rent it full-time to a long-term tenant. You could likely get 1800 per week.
If you think you can rent to a tenant as soon as his current agreement is up, do not extend, Even if you extended him at market rate you will likely see you will lose in the trade off.
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Thanks for all the great responses!
@Nicole W. I appreciate your candor about this. It's hard to tell how something might sound other people when you right it (good thing for BP).
I agree in general with your response. In this case, because he's a good tenant and reasonable and professional, I'm considering just having a conversation with him about the issues.
We are currently month to month. Actually, having the options laid out is a good idea.
@Karen Bickford That is a good idea also, we had considered that for long term. I would have to check the HOAs to see if it's possible first. Also, it would be more time intensive, something I am sorely lacking. The only thing I've had to do recently is deposit the checks.
Worth taking a look at though.
@Joe Trometer Thanks for the input on seasonal type rentals. It won't sit for months, but it is just easier to rent in the summer and I may get more. The policy angle is always good, too. If he wasn't such an ideal renter, I would just move on.
Any more input and experiences are appreciated.
@Jeff T. yes HOA policy would definitely have to be considered. I have a vacation rental in Clearwater Beach Florida and rented about 39 to 40 weeks of the year. Rent ranging from 1400 to 1800 per week.it is definitely a cash cow, it does take some work to get set up but once it is all set up it is actually very easy.
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