Renew Lease or Not (Early Payer, Bad Tenant)

27 Replies

I am a newbie, just converted my primary residence to a rental last summer.  We're nearing the end of our first lease and have a bit of a problem tenant but they pay rent early or on-time every month.  We're on the fence about whether to renew the lease or not and figured folks here could be helpful.  There is no month to month, it's sign a new lease or leave.  I don't have to give any notice legally.

Primary reason to renew is that they pay their rent well in advance and that has never been an issue.

However, the tenant has been responsible for two major plumbing issues resulting in flooding.  One was backing up the disposal and continuing to run the dishwasher, flooding entire kitchen and crawl space and destroying hard wood floors.  The second is that somehow they froze a "freeze proof faucet" in the crawl space.  Tenant denies he knew anything about it until he went to connect a hose, but the evidence suggests otherwise.  It's clear as day that for one, he left the faucet pressurized in a freeze, and two, he was aware of it weeks ago and shut the faucet off because the flooding wasn't substantially worse.  Neither time, did he inform me of the flooding when he became aware of it, which is what I really have a problem with.  There are a number of other minor lease violations and the house and yard is in terrible shape.

I am concerned about losing a month of rent, Im also concerned about potential damage if I dont renew the lease and he has another month living there. 

So BP community, extend another lease or not?

@Aaron Heun

If you are not careful, you may not any property to rent at rate this tenant of yours is going. If I pay you $500 to spit on your face and smack you 2 days out of the week, how long would you continue to let me do that? Not long I hope. 

Same thing here, your property is your baby, and if you are going to let someone continue to mistreat or disrespect your baby just because they pay you on time, then you don't deserve to be a landlord then. 

Its been said here many times, a good percent of landlording is managing human behavior and if you let this tenant continue to mess up your property with no repercussions, you are enabling bad behavior. 

You shouldn't feel scared to renew a lease because the tenant may damage your property. If that's the case we all may have bad tenants living in our property for generations. 

They may pay early or on time, but have you made any money after these expenses? You're in business to make money and if this trend continues, can you afford to lose more money next year?

I appreciate the input, I think we've become the frog in cold water that gets brought to a boil.  You guys are helping point out how hot the water is.

The house has appreciated a lot, we have great cash flow and we took a large enough security deposit to cover everything damaged to date. I will wait to get June's rent before notifying him which will mean we received 100% of rent.  The issue will be if future damage offsets more than the remaining security deposit.

@Aaron Heun A tenant paying on time (or early) isn't a plus, it's the most basic of their responsibilities. Hopefully they paid you for the damages, but it doesn't sound like it. Cut them loose asap.

I appreciate the advice from all of you and will definitely not offer another lease, but won't tell the tenant that until Ive received the final month of rent.

What suggestions do you have to help protect the property in the final month of the lease when he knows he's being kicked out.  

You’re not kicking him out, you’re just not renewing the lease. He could have done the same thing on his end.

Just be nice and let him know that you’re going to be making some changes and won’t be renewing his lease.

While it sounds like he’s been uncommunicative, I wouldn’t equate that to doing intentional damage. remind him that the house needs to be cleaned and you’re hoping to return his while deposit as long as there’s no damage within xx days (based on your state laws) or sooner if possible.

Good luck!

Have you thought about getting rid of the disposal and possibly the dishwasher? Less plumbing headaches, no vacancy and you won't have to screen a new tenant. Just throwing it out there. 

Did he pay for the damages? Are you just counting the $$ off his security deposit? If his security deposit already got eaten up by that then you will lose $$ based on your description of how he treats the unit

If a tenant damages a unit while still in the unit and the damage is fixed and paid for while they are still there then the tenant should pay for them at that time....don't deduct that off the deposit. The deposit is designed to cover costs AFTER the tenant vacates...not during They don't get a credit to screw stuff up until their credit runs out....then you get stuck with the bill after they are gone and the "deposit account" doesn't cover what they owe you.

If this tenant is that careless cut them loose..... just because they pay on time doesn't make them a good tenant

@Mike McCarthy Good point.  I guess while I have my own reasons for not renewing, I don't have to communicate my frustration in the conversation.  There are plenty of reasons we wouldnt be renewing.

@Michael Hartman I guess thats a possibility but only solves one of the negligence related issues.  My impression is that usually people dont make the same mistakes twice, and that I can't guess what the next negligence related issue is going to be.  I feel like trying to mitigate future problems is going to be like playing whack-a-mole.  I got a higher end freeze-proof faucet that has an internal drain mechanism to relieve pressure if a hose is left connected, but I would bet he isnt going to leave a hose connected in the winter again. 

@Ned J.   He paid for a dehumidifier rental and some immediate costs with the first flood.  However neither of us wanted to gut the kitchen while he lived there so the repairs have not been made yet.  I figured I would make the repairs and pay out of security deposit after he left.  I also didnt want to treat the issue as resolved, and then find that the damage was worse than previously thought.  You make a very good point though for me to think about in leases going forward.

@Aaron Heun at this stage do you know how much the actual repair is going to cost?

Lets say his deposit is $1500......and right now you know the repair is going to be $1000..... he now effectively has a $500 deposit to cover any/all other expenses he creates while living there or when he moves out and leaves damage/cleaning/late fee/missed rent etc etc...... so if he's already eaten your "cushion" to cover expenses, you may be left holding the bag when he leaves. See my point?

If you can document tenant damage while they are still living there and you know a pretty accurate cost of the repairs, my suggestion is to bill the tenant now...don't postpone them being held responsible until your have to return a deposit when they move. By then, that $$ may effective be long gone and then some....

@Ned J.

Fortunately my deposit is 4400.  And I just got last month of rent.  I really appreciate the point going forward as its something I have definitely overlooked.  I think Ive got enough cushion in this case though, knock on wood.  We'll see if thats still the case after he finds out he cant renew.

@Aaron Heun , I believe every state has at least a 30 day notice of non renewal requirement. Some are 60 days. Read your state's landlord tenant laws to see what your state requires, then give him proper notice.

I would not renew. Deduct the cost from the deposit and issue the state mandated notice of non renewal

I like the suggestion above about the dishwasher and disposal removal. When I buy a place with either of these they are quick to be removed. Disposals are abused, and you see what happens with the dishwasher...

Going further on dishwasher and disposal discussion.  I think that would make sense for a lot of rentals, like ones I previously lived in.  However this is in a 95% owner occupied neighborhood and is in very good shape.  My experience aside, the target tenant is someone who can take care of a disposal and a dishwasher.  

No way NOT having a dishwasher is going to fly in our market...... could easily skip the garbage disposal but no way on the dishwasher delete.....

I may go into a different direction than everyone else, but it depends on what kind of tenant pool you may be dealing with. It's just a different way of looking at it. I would do this more for a C or D neighborhood, maybe for a B-, but not for an A area. In the end you're the judge on your situation.

Keep in mind, that you can't just use his deposit to renovate your kitchen, as there'd be regular wear and tear, that a judge would deduct, if they were to take you to court. Even, if it was a brandnew kitchen when they moved in, you wouldn't be able to just replace cabinets, without wear and tear being taken out of it. 

You mention that you are worried about losing a month of rent. If that's a make or break situation, then this could create things much worse, as you might lose more than a month, if you have to do major renovations to get another tenant. 

Yes, it sucks to have had these problems and these tenants, BUT, sometimes it's worth it to suck it up and make some compromises. If you keep this tenant, they'll be ok with the kitchen not renovated, as they're the ones responsible. They'll pay ahead of time. They won't do the same mistake again. 

Just some food for thought.

Originally posted by @Mindy Jensen :

@Aaron Heun , I believe every state has at least a 30 day notice of non renewal requirement. Some are 60 days. Read your state's landlord tenant laws to see what your state requires, then give him proper notice.

 I don't have the link but MO is no notice for non renewal.

Before I throw in my two cents I want to recap my favorite take aways up to this point:

@Matthew Olszak said paying the rent early isn't a plus; paying rent on time is a bare minimum of the lease.

@Michaela G. brought up that your tenant pool depends on the quality of the property and neighborhood, but it sounds like it's a nice, single family area.

I just non-renewed a problem tenant that I inherited with the property.  It really isn't his fault he was a crappy tenant, it was mine and the previous landlord's.  He was never trained on how to be a good tenant and, by the time I got there, he was fairly convinced it was his place and nobody was going to tell him how many cats he could have (six...the answer was six).  If you are in a hot market do not renew this guy's lease.  If you think you'll miss multiple months AND you are confident you can re-train this tenant consider keeping him but making him sign an addendum on the month to month agreement.  For one have him get a renters insurance policy and name you as an additional insured.  This will give you $100k+ of liability coverage if he screws up again.

I would not renew this tenant. Paying on time is a bare minimum. This tenant has caused too much damage and has failed to inform you of it in a timely manner.