I am buying a duplex that the owner has been (mis)managing personally. I think they just got old and started losing interest. Both sides are really under market for rent, but one moreso.
The really cheap rent of the tenants has been there for 5 years, but never got a rent increase and still owes a balance on the security deposit. She also has two large dogs that are supposed to be outside only per the lease, but she made no effort to hide the fact that they are inside dogs. They are well behaved and don't tear anything up so I don't really care about that. BUT, she was supposed to make a $300 pet deposit when she moved in (5 years ago) and never did.
The leases were just renewed a couple of months ago so I am looking at a year of honoring them as they sit. How do I honor the leases and still try to secure these deposits? I thought of structuring an addition monthly payment until the balance is paid. This would also get her used to paying closer to market rent for the future increase. I would like to keep her, and she is not going anywhere with 2 big dogs cheap.
ALL ideas and insight are greatly appreciated
It pains me to say it, but you should probably not bother.
You could certainly bring up the deposits from 5 years ago and see what she says but I know how I would feel if Verizon or some other vendor I use suddenly asked me for something from 5 years ago. Ask but if she seems reluctant I would not make a big deal about it.
You are already a few months into the next lease, the tenant is paying on time and the dogs are not currently doing any damage so wait until the next renewal and maybe consider increasing the rent by $25 more than you were considering. Assuming that does not put you out of sync with your local market, you will end up with $300 extra at the end of that lease period and it will carry through to subsequent years.
Agree with @Fred Grant
Asking for money that she was suppose to pay five years ago is not a great way to start the new relationship. They people you are buying the unit from shoukd give you that deposit as part of the deal, it's their fault they didn't collect it. I would also give the tenant some comparable rentals in the area to show that the current unit is renting under market value, and that you are going to raise the rent x amount after one year. That gives her time to plan a move or adjust her finances.
Not giving legal advice but I'm thinking you don't have much to stand on. The statute of limitations for breach of contract issues in Texas is four years. Since the previous owner didn't collect the pet deposit for five years, it obviously wasn't that big of a deal to him and he de facto acquiesced to the situation.
While you have to live with it for now, that doesn't mean you can't change the terms of the lease when it comes up for renewal. I would give plenty of notice that the new lease will include a pet deposit, and that you will enforce that clause. Or charge an additional monthly pet fee on top of the rent in lieu of a deposit.
Thanks, I don't want to be obtuse about the issue, by all accounts she has been an awesome tenant in a bad situation. The previous owners did next to no maintenance of any kind and she does all her own repairs. I suspect there was an unspoken understanding. Cheap rent in exchange for her never asking for anything while the property deteriorated.
This will be my first personally managed property, and most of my people skills come from the military LOL. The current lease says no dogs inside, and she never paid even the full security deposit let alone the pet deposit. None of this worries me, per se, I just don't want to be perceived as weak or indifferent.
Thanks again to everyone.
Join the Largest Real Estate Investing Community
Basic membership is free, forever.