New owner/old tenant - Asking for additional deposit
I'm expecting to close on my first home in about a week. I'm buying a side-by-side duplex. I'll be living in one side while a tenant who already occupies the other side will be staying. Tenant has been paying $650/mo, which I will be raising to $700/mo, which is at the low end of comparable area rents ($750/mo if tenant wants to use garage, which is having a new door and opener installed, and use electricity from garage to charge his hybrid car). I'll be giving at least 30 days notice for the rent increase. The tenant also only has a $250 security deposit. I want to raise this to the equivalent of one month's rent. How should I go about doing both of these things without making the tenant upset enough to leave? From what I have seen and know about the tenant, I would like to keep him, at least for the time being. Any advice or suggestions would be appreciated.
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The fact that the tenant is on a month to month lease is perfect. Now you just need to speak with him and tell him you're going to require him to sign YOUR lease. If you want to lock him in on a 1 year lease or just another month to month lease, it doesn't matter. The issue is you want him to sign YOUR lease.
Just explain that your attorney created your lease because it covers everything you want to cover and if he doesn't want to sign a lease with you, you'll understand but that you will then have to give him 30 day notice to vacate.
If he does agree to sign the lease, then put in the lease that the security deposit is going to be 700 dollars. Let him know that his previous deposit amount will be credited towards the 700 but that he will have to come up with the difference.
If he says anything about it, just tell him , that your business requires your tenants to sign your lease and all your leases require security deposit of one months' rent. And, again, if he doesn't want to do that, you'll understand but that you'll need to give him a 30 day notice to vacate because thats the only way you operate your rentals.
Ultimately, he's going to likely have to pay 750/mo for rent based on your estimated comps and he's more than likely going to have to put down 750 for the security deposit since most landlords require sec deposit equal to one month's rent.
He'd be better off staying with you and coming up with the difference then he would starting over with a new place and having to deal with moving all his stuff to boot.
People don't want to move - not unless they're going to save themselves money or not unless the place they're at has issues (i.e. landlord not repairing stuff, etc).
But thats how I would approach the bump. Speak to him first and tell him you are going to require him to sign your lease and that the rent and the sec deposit are being increased. And if he chooses not to agree to it, then let him know you'll have to give him a 30 day notice to vacate since you can't continue to rent to him under the old lease/system.