I have tenants that have lived in one of my units for 3 years now. There have been no issues whatsoever with them and they always pay rent on the first of the month. I talked with them yesterday because their lease is up at the end of June. They mentioned that their kid was accepted into a school near the south side of Chicago and are looking into purchasing a condo downtown to be closer. They haven't been able to find anything yet and aren't going to be in town for the next three weeks, which makes it September or October until they would close on a new place and move in. They mentioned that they would be happy to sublet the apartment if they signed a new lease and moved out early but I don't let my tenants sublet because I prefer to find new ones myself.
I was thinking of just doing a 6 month lease for them but even if they moved in September or October and paid the remaining months I'd still be left needing to rent the place in January. I'm pretty sure most people in Chicago don't move in January, especially the kind of tenants I'm looking for.
I could just go month to month with them but, again, that could be November when I'd be looking for a new tenant which is probably worse than finding one in January.
Another option I considered is doing a 9 month lease, which would go through March. Then depending on when they move I could try to find someone for the remaining months and work on a new lease starting in April. I'm just not sure how likely it is that I'd find anyone wanting MTM during those months.
I could also just tell them no and make them move at the end of June. I'd prefer not to do that though because they have been great tenants for three years and have made my landlord life easy. If l can return the favor and make this move easy for them it would be nice.
If anyone has any advice or more ideas, I'd really appreciate hearing them.
Don't get emotional. Those tenants that have made your life easy in the past, are now making it hard on you. Don't let your tenants run the show...it's your business that's at stake here.
I understand the reasons for wanting to find them a new place where they want to live, but that's not the high priority here. Number one is to keep the property rented, without the "short term" solution hurting you in the long run.
You've run through a number of scenarios where in the end you are the one that gets screwed...so don't do any of them. I think you know what the answer is, but your emotions are getting the best of you.
Having said all of this, you can still make this a "win-win" situation...just don't let emotions rationalize your "win-win" into a "win (tenant)-loss (you)".
Hey, @Tim Coppola thanks for starting the thread! Obviously, they have been good tenants to you from what you mentioned, but like @Joe Villeneuve said, you gotta take emotions out of it. At the same time, maintaining a good relationship throughout the remainder of the lease term is important, as you are trying to show the unit to new prospective tenants.
I would suggest to either renew for the entire year or find a new tenant. Now in regards to the sublet or re-let situation, I know you said you like to find your own tenants but this you can do as well. In the Chicago RTLO, it outlines that the owner has the right of refusal.
In other words, your tenants would need to find a qualified tenant to replace them that passes the same application process as they did. If this person is not qualified then you do not have to allow this sublease or relet to happen. If they are unable to do that, then they are responsible for the remainder of the lease term.
And you are correct in stating that winter months present more challenges to secure tenants, so I do not suggest putting yourself in a less than ideal market time.
Best of luck!
@Tim Coppola You can make this work for both of you. Do a year lease and tell them you'll let them break the lease once they find a home, but you'll need 60 days notice, and 2 months deposit. That way you'll have enough time to get the unit re-rented with little-to-no vacancy (if you can't get a unit rented in 2 months, even in January, something is wrong). The 2 months worth of deposit ensures you'll be paid for those 60 days even if they don't give you notice.
@Tim Coppola I agree with @Weston Harding to secure another year lease or find new tenants and to leave emotions out of it. Like it was mentioned have the current tenant sublease the property but instead of having them run the whole process only allow them to do a portion of it. I would let them list the property for rent, do the showings, fill out applications (give them a copy of your application) then I would handle the rest of the process. I would do the actual credit and background checks and if all looks good I would meet them in person to handle the lease signing. This way the current tenants will be responsible for the rent until a new tenant is found, you don’t have to do the initial leg work of finding the tenant and all the showings involved, and your current tenants will be happy.
After 3 years as tenants I would be putting them on M2M and ride it out.
Tell them you will hold them to 60 days notice in advance of moving. Collect the last 2 months rent in advance. My bet is they will try to skip out on at least the last months rent if you do not.
Thanks for the responses, I really appreciate it. I agree that I need to keep emotions out of it and just keep my best interest in mind.
I like the idea of having them sign a new lease with a 2 month security deposit, however, I don't like the thought of possibly having to sign a new lease in January or February simply because I feel that it would be much more difficult to keep having to find tenants in those months.
I think I'm going to give them two options. The first is to let them stay for an additional month, which would put the new tenant lease starting in August which isn't a bad thing for me. The other option will be the new lease allowing them to sublease when they move out.
If they do sublease this will be my first time dealing with that. From the other experienced landlords out there, is there any specific advice you can give me to help me avoid putting myself in an unpleasant situation?
Thanks again for all the advice so far!
Thanks for replying. I thought about just offering to keep them on MTM going forward, however the apartment is in an area with a lot of schools and I aim for tenants that are families going to those schools. As I mentioned above the idea of them moving out in November or December and having to try and find tenants to move in then feels like a nightmare to me.
Get them out in June, move on.
@Tim Coppola , you can let them find the sublets, with the condition that you vet and approve the new tenants and make sure the new tenants meet your specifications. As long as the present tenants are fine with your conditions, go ahead a sign either a 9 or 12-month new lease. Also, build a price increase in the new rent, as those tenants have the rent at the price from 3 years ago.