Renters keep leaving early

8 Replies

So I have 1 rental with only 2 renters, where the first lasted 11 mos. the second 2 mos. Both so far have been high quality, but effectively use my well maintained rental in an A neighborhood as a staging area to look for a permanent home. Rent rate is always in line with market. For the second tenant I had a lawyer draft an Early Termination Fee clause as the then prospective tenant casually mentioned he may not stay the entire 12 month term. Now the tenant doesn't want to exercise the ETF by giving me 30 days notice, rely on landlord exercising "reasonable effort" to rerent before the next 1st of the month and basically seamlessly walk away w/out having to pay fee or additional rent before the next tenant moves in. I have explained the 2 options for the tenant on multiple occasions 1. You can pay to leave early or 2. You pay until a new tenant is placed. Both of these are signed and in the lease agreement. I am fine with not receiving the ETF, but I will hold him to point # 2 per the contract. 

My questions to the community:

1. How would you manage this going forward to ensure or increase your chances of having the tenant stay the full 12 months?

2. What reasons can you think of for the tenant to find it in their best interest to pay the ETF and move on other than not having to pay for the duration of the contact?

Thanks!!!

I have let several tenants leave early and each time replace them with new tenants paying more money. We have had an escalating rental market for some time. How much security deposit are you collecting? Does your lease have any clause allowing you to setoff unpaid rent from their deposit? I am sure that would be dependent on your state laws and might be worth investigating.

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Thanks Nancy!

Hi John. deposit = 1 months rent. First/Last/Deposit all due up front. The lease is pretty tight so he is obligated for 12 months. I believe the K has that as a clause, but I will double check, good point. Thanks!

It sounds like your biggest problem isn't the early term it is the repeat turnover.  Maybe that is something you address in your application in the future.  You really don't just want them to stay the 12 months you sound like you would like a longer term tenant. To get that ask how long people plan to stay on the initial application and look at their  previous tenancies. You could make it your policy to not accept people  who were not previous renters because if they are relocating they will probably buy eventually.   If legal you could put a  fee in regardless for early termination.  If a tenant leaves prior to one year they pay x amount to cover turnover costs and also cover rent until a replacement tenant is found. Tenants can always leave and the 11 month person isn't much different then someone who stayed full term but two months-- painful.  I have seen people require 30 days from the first so  if you don't get notice on the first they just rented for another month. All said check what is legal locally.

@Brett Malen I am running into this to a lesser degree with my property.  My first tenant stayed 15 years, but the last have stayed 15 months and bought a home.  The last time I rented, I had people ask "we intend to leave early, what is the penalty."  I have re-drafted my lease to include a "buy out" clause which states that the lease can be terminated early by either party upon 60 days notice in writing and payment of x dollars which equals 2 months rent.  The tenants are still obligated to pay rent during the last two months. 

Also, if they're giving references of people from out of the area, then you know they'll only be there for a short term.  Also, look into only doing a 2 year lease.  

It's really interesting to me to see the different strategies. I rent short term furnished rentals in near downtown Seattle. I require 30 days notice and then they can leave with no penalty. These are A properties in great locations so they rent fast. My theory is that I do not want anyone living in my house that does not want to be there. Also, they rent so quickly that it's not hard at all to find a new renter. 

@Allen Clark I  also think that the different strategies are one reason to come to this site you hear different perspectives and hopefully think about things from other viewpoints. Your strategy here would be seen as a student rental being we are close to the university and not being as big as Seattle (and we'd get less rent). I do always try to work with leavers because i too don't want them there if they don't want to be but I also try not to pick them unless the short duration lease also suits my needs.