Successfully renegotiating an inherited tenant lease?

Question

In a recently purchased property, I inherited a good tenant who is 1 year into a 5-year lease.  She's related to the previous owner, and the monthly rent is probably $200 below-market.  I like her as a tenant, and she really likes her apartment and the location -- she's retired and says she would like to stay for many years.

In a recent conversation, she mentioned that the old single-pane windows and doors are drafty in the winter (not uninhabitable, just drafty).  Normally I think that's a renovation I would do in-between tenants, and my understanding is that she agreed to lease the property in its current condition.  This is truly a "discomfort" issue and not related to safety or habitability.

I think there's an opportunity to renegotiate the monthly rent in exchange for making the upgrades that she wants, and it's an upgrade that I wanted to do anyway.  Does anyone have advice on renegotiating a lease that could help with my situation?

Kristina Heimstaedt · Answer

I might structure the conversation as follows:

"Hi tenant. I hear your concerns about the drafty windows and x, y, z. I would love to help improve things. However, with the current rate of rent that you are at, I won't have accrued enough in the budget to apply these upgrades that you've requested. If we can adjust your rent, I can make these upgrades happen faster as I will have accrued more for just such occasions. I think a $200 increase bringing you to a grand total of x/month would allow me to make these upgrades by y date. Without the increase, I think we won't have enough set aside in the budget to make these upgrades until date z. I'll leave the decision up to you. Let me know what you decide."

I'm a huge fan of controlling the structure and allowing the tenant to make the decision. Once they've made the decision and they try to come back and complain, you get to say "I left the decision up to you". I have yet to have this not work.

I'm sure this will go smoothly. Congrats on the new property!!!

Andrew B. · Answer

of course you should consult your local landlord tenant laws, but if this is not a habitability issue, then you would be entirely within your right to refuse to make the upgrade without lease renegotiation. being $200 under market can hurt real bad since she is there for 4 more years. you can negotiate a raised rent until the lease is up, or you can simply tell her that in return for the upgrades she will be moving to a yearly or month to month in leiu of raised rent. this would give you more control of the property. of course you can also do a combination of both if you can negotiate that with tenant.

Christian Longacre · Answer

Hi everyone, just wanted to close the loop on this one and let you know how it went.  I got a quote for the replacement windows and approached the tenant with a few options.  She understood that this is an expensive upgrade and that she agreed to rent the unit in its current condition.  Ultimately she decided to keep her current lease and her current windows.  Thanks again for the advice!