BP community- I received an email from a tenant at one of our SFH that things with her relationship have reached a point that she can no longer live with the person. She informed me that she has moved out of the property and wants to meet to give me her garage door opener and set of keys etc. I called the tenant and we had a conversation and she understands she is legally bound to the lease, she is also aware of the clause in the lease that states should the lease be broken there will be a financial penalty. She says the other party has the intention of remaining in the residence, and she would guess he would intend on moving a room-mate in.
I have a call schedule tomorrow morning with the other party that is on the lease.
After speaking to the other party and understanding his intentions assuming he intends to stay do I make any amendment to the lease releasing her of liability? Do I just lease the lease alone and conduct business as usual?
She mentioned he would want to have a 3rd party move in which would of course be subject to an approval process. If this is in fact the intention do I simply terminate the current lease and create a new one? If so do I increase the rent to the current market rent?
They signed an 18 month lease with 12 months remaining. Based on my research for comparable properties using rentometer, hotpads, and craigslist this property would easily rent for $150-$200 more a month due to the current demand.
Not really sure how to go about this one and any experience or advice is really appreciated.
I don't recommend trying to raise the rent by $150-$200 on them, I see them going to find somewhere else to live if you do that. On the flip side, you can take the chance of keeping to the original contract and hoping that he won't pay all the rent, then if he decides to move out, you could then try to rent it out for the market value. But if your getting good cash flow on the current lease agreement and they are good tenants...you may want to let him stay until the end of the contract. Many decisions to make, but make sure you make the best business move.
I would probably keep the lease as is. Then if things go south you can go after both of them. The negative is that if you have to serve any notices, you have to find her. In this scenario you would do your normal screening on the new applicant, and write an addendum to add them as an authorized occupant.
If you feel comfortable releasing the tenant from the lease you can write a new lease with the new parties and transfer the deposit to that lease. If the new applicant is financial stronger than the departing one this may be simplist. In this scenario be sure to have both parties sign that they are willingly ending the contract. You can waive or lower the lease breaking fee.
Utimately you want to minimize turnover cost and lower your risk of default.