Problem rental

[Mandy McAllister]

My husband and I have two rentals- my former residence, a condo in the city of Chicago, and his, a SFH in a B/B- western suburb. My condo cash flows $550 per month, we lose about $50 with his. I need your advice on his- he rents to friends of friends, public servants who just had a baby. Current comps in C+ neighborhoods are $1600-$1650 per month. Rent in 2013 was $1050, I convinced him to raise it to $1200 last year. These renters are always late (up to 20 days late) paying rent, were "confused" that a security deposit meant we hold finds (so we have no money in security deposit) and we're a solid $400 per month under market. How would you handle this situation? My thoughts are- 1- dump the 15k under water house, start with a new property I can ensure we use systems to check out tenants. 2- give these tenants 30 days notice (lease ends 8/31). 3- ask for $1300, and explain the late fee we haven't been enforcing from the lease. I think I've learned my lesson letting my extremely kind, but not quite business savvy husband totally take the reins on a property!! Thanks for your advice, Mandy

[Joe Bertolino]

I would give 30 day notice. Re rent at market rates with a fresh landlord tenant relationship. This doesn't sound like a situation you could salvage with the current tenants, the pattern of behavior is established and it won't change.