I just closed on a property yesterday. At closing the seller hands me a letter from a single tenant requesting the landlord give the OK for her husband who is getting out of jail in February to be able to stay there, the address, and the landlord contact info. He's in state prison supposedly for DUI. She had previously been living with her daughter and she moved in in August. I find it impossible he is doing that much time in STATE prison for just a DUI.
A little bit about the purchase. The building cash flows as-is very well. The roof needs replaced and the wiring needs redone/ replaced as it is still knob and tube. In a nutshell I could easily spend 30K on just deferred maintenance. The seller gave us a $11500 credit to complete absolutely necessary repairs like the roof and repair to some of the electric service.
The rents are under market value by at least $50 per unit (it's a 3 unit building). I plan to raise all the rents in 6 months by $30 which is aggressive but fair - there's no way they could find cheaper housing unless they were renting a just a room. This tenant has the nicest unit.
Her lease is up at the end of July. The unit is SMALL. I actually have another unit around the same size and couples look at it and walk out (even though I warn them it's best suited for one person). So I can't imagine they would stay beyond July anyway. She was terrified of the rent increasing when we looked at the building. She insisted she couldn't pay a penny more.
To get to the point, I don't want to rent to him. I'm thinking of writing her a letter explaining that it is not the policy of our company (we have an LLC) to rent to recent convicts (Please help me with the terminology). I've faithfully done credit and background checks for any tenant I've ever rented to in the last 5 years so I have proof I stick to my guns about this. I'd like to allow her to break her lease as long as she gives me at least 30 days notice. My market is hot and I'll have no problem finding a tenant in that time frame - even with the rent increase, even in winter. I want to make it clear I'm not evicting her and she absolutely can stay the term of her lease. But I need to come up with parameters so that her her husband isn't squatting. The current lease in place says it's a $75 per month charge for allowing anyone else to live there without consent. I'm going to also inform her that the rent is being increased. I was only going to raise it by $30 but in order to essentially sway her to just find another place, I'm considering telling her it will go up by $50 - she really does have the nicest unit. Is that too aggressive?
Any feedback is appreciated!!
First raising the rent by $50/month in 6 months when their leases end would be fair. $30 is a gift.
As your lease presently reads you can not prevent her husband from moving in..."The current lease in place says it's a $75 per month charge for allowing anyone else to live there without consent."
This clause means that landlord approval is not required but that they must pay an additional $75/month. This is a very strange clause. However since she is asking simply say you do not rent to convicted criminals and that if she wishes you will let her out of her lease with 2 months notice, vacate end of February.
As for getting rid of her unless your state regulations state otherwise you do not give a reason or discuss her husband you simply send her notice that you will not be renewing her lease when it concludes. No point in giving any tenant ammunition.
I am having problems with your desire for us to reassure you that what you are doing is right. Aggressive...no sounds more to me like you are being soft. Inform the tenants you are jacking their rent to full market as soon as you can and give notice to any tenant you do not want to stay.
New owners clean house, they do not coddle or ***** foot around. Now is your best opportunity before you/they get to know each other.
What does your lease say about guest or adding additional people to the lease? I use a lease that states any guests staying 14 consecutive days or more must be added to the lease and go through the same screening as the original applicant. If they do not pass the credit/criminal background they will be denied.
I would advise offering to screen the husband(likely he wouldn't pass) or increasing the rent to fair marker value.
Just look the husband up in the court records (if they are public in your state) to see what he is in jail for. If it is a DUI, it really isnt a big deal Id say. A DUI is not a barometer for how good or bad a tenant will be.
According to the Federal Bureau of Investigation (FBI), over 1.4 million drivers were arrested for driving under the influence of alcohol or narcotics in 2010. Unfortunately, that astonishing figure represents just 1% of the 112 million adults in the U.S. who self-report episodes of alcohol-impaired driving each year.
'I find it impossible he is doing that much time in STATE prison for just a DUI' HA... that did make me laugh. I agree wholeheartedly. I think you've got to work to get that sweet gig.
FYI, knob and tube may be okay. If its in good condition, at least in my last area, it was acceptable as long as it wasn't fraying and such. Yes, an upgrade would be best suited but it wasn't required.
@Thomas S. makes a good point that the $75/surchage is a strange clause and I'd agree it is a loophole in the lease to allow him in. BUT, since you're a new owner with a different business policy of not renting to felons that may trump that clause.
I think the best bet is to have her leave. You don't have to give notice for WHY you won't renew so that does cover your butt. I would recommend that you should raise the rents the $50 bucks for sure. With your current tenant you can give notice that you won't be renting to her anymore on the old lease with the old provisions with the old backround check. If she would like to continue renting from you you would have her fill out a new application and backround check. Who knows, maybe she's done worse than him?
If he received state time for a DUI offense, it would be after prior DUI convictions.
Thanks for all the feedback. I agree the $75 for an unapproved occupant strange. The lease also says, "The premises shall be used solely as a residence for 1 adult and no children". So in the letter I wrote her I said that it would there would be a $75 fee if she allowed him to stay there without written consent AND that it would be grounds for eviction. The lease isn't super clear but I find it doubtful a judge would MAKE me take this guy.
I also defined occupant as someone staying 2 weeks or more within 6 months since it is not defined in the lease at all. That seems to be industry standard and totally fair.
Mentally I keep going back and fourth on the $50 increase. I'd rather she just leave anyway so it doesn't hurt for me to say i'm increasing it by $50. That's what i'm going to ask for it if she goes anyway.
I totally appreciate the feedback. I gave her the option to give me 45 days notice without payment penalty to terminate her lease. I should still probably define the penalty if she doesn't give me 45 days notice.
The letter is to the point but I don't want to leave any loop holes or wiggle room.
Also, I forgot I can look up criminal charges on public record but she never gave his name in the letter. She never even gave any indication she was married on the application the sellers gave me which is likely intentional.
Isn’t banning an ex convict from a lease a form of discrimination?
Im not saying i agree with this, i just remember reading an article while doing research. If I find the article I will share it..
If this is true just keep this in mind when you refuse the husband, you might need to give another reason for refusing him..