Advice: Chicago tenant unsure about renewing lease

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Advice: Chicago tenant unsure about renewing lease

Gillian C.
Chicago · Member since 2019 · 27 posts · 13 votes

Hi all,

New Chicago landlord here. In Chicago I understand that we must give 60 days notice prior to a rental price increase or termination/non-renewal of a tenant's lease. However, looking for some advice on communicating with a tenant who has not decided if they want to stay. Here's the deal:

- Notified tenant exactly 60 days before their lease was up that rents would be going up $100 from $1350 to $1450, and parking would be going from $75 to $100.

- Followed up several times. Asked for a final decision by last Saturday, which was ~2 weeks after initial notificaiton. Tenant communicated that they had not made a decision.

- Informed tenant that unit would be listed (Sunday and Monday).

- Listed unit at $1575 (Tuesday)

- Within several hours, received a request for a showing next Saturday. Told the tenant that we would cancel if they let us know that they wanted to stay (though after the immediate request for showing... feeling pangs of greed, risk/reward...)

- Tenant responded that they are "inclined to renew" but want to look at other options. Also said they understand that we need to show the apartment without an answer from them.

Any advice on how I navigate this? If the showing on Saturday goes well with one or more applicants, they apply and have good credit etc and are willing to sign at the higher price, do we take it and tell current tenants they lost their chance? All thoughts welcome re: strategy, tactfulness, and legality of communications. Thank you.

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Mark AinleyBusiness Member
Property Manager · Roselle, IL (Chicago Suburb) · Member since 2013 · 2k+ posts · 1k+ votes
7y

@Gillian C. After Saturday's showings whether the tenant is interested or not tell the tenant they are singing a lease and you will need to have them out of there by ____ allowing you a couple of days to turn over the unit. Don't say anything about renewing just tell them you have a new tenant and they need to move and see how they react.

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  • Mark AinleyBusiness Member
    Property Manager · Roselle, IL (Chicago Suburb) · Member since 2013 · 2k+ posts · 1k+ votes
    7y

    @Gillian C. After Saturday's showings whether the tenant is interested or not tell the tenant they are singing a lease and you will need to have them out of there by ____ allowing you a couple of days to turn over the unit. Don't say anything about renewing just tell them you have a new tenant and they need to move and see how they react.

    [email protected]630-781-6744Podcast Guest on Show #72
    GC Realty & Development LLC4.61066 Reviews
    WebsiteView Page
    3Reply
  • Thomas S.
    Member since 2016 · 13k+ posts · 12k+ votes
    7y

    If the showing goes well and they want to rent stall for a day and immediately inform the present tenant that if they now want to stay the rent will be $1575 and you need an immediate response. If he agrees have the lease signed the same day otherwise go with the new tenant. Unless your present tenant is prepared to sign the lease immediately he is stalling while looking for another place. Do not allow him to control you or you will lose them both. He stalled and will now pay the price.

    Since you are now supplementing your tenants rent it will be to your advantage to find a new tenant if you can transition smoothly. You will be in control and it will be a win for you either way. Do not hesitate, do not stall push for a immediate signing of the lease regardless of which tenant you choose. Make sure you get the cash up front if you go with the new tenant. First and deposit, bare minimum deposit and first before you hand over the keys (cash only). 

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  • Gillian C.
    OP
    Chicago · Member since 2019 · 27 posts · 13 votes
    7y
    Originally posted by @Mark Ainley:

    @Gillian C. After Saturday's showings whether the tenant is interested or not tell the tenant they are singing a lease and you will need to have them out of there by ____ allowing you a couple of days to turn over the unit. Don't say anything about renewing just tell them you have a new tenant and they need to move and see how they react.

    Thanks for your advice Mark. How do you approach the risk of a new tenant at a higher rent vs. the comfort/safety of an existing tenant at a below-market rate? The current tenant pays on time and keeps the apartment clean, but also has 2 dogs, a cat, 4 birds and what seems to be 6+ people living in a 3 bed/ 1 ba. They are pretty low maintenance and we'd be happy to keep them. But if we get a potential tenant coming through at $125/mo more than the existing tenant, with proper vetting do we go with the new tenant?

    Someone else mentioned telling the tenant that they can re-sign at the higher rate. I'm guessing that's not allowed given the Chicago 60 day rule - we told them about the first increase within 60 days but now we're past that deadline (unless the rule means you have to tell them the amount increased but not that you have to specify the amount). Thanks very much.

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  • Gillian C.
    OP
    Chicago · Member since 2019 · 27 posts · 13 votes
    7y
    Originally posted by @Thomas S.:

    If the showing goes well and they want to rent stall for a day and immediately inform the present tenant that if they now want to stay the rent will be $1575 and you need an immediate response. If he agrees have the lease signed the same day otherwise go with the new tenant. Unless your present tenant is prepared to sign the lease immediately he is stalling while looking for another place. Do not allow him to control you or you will lose them both. He stalled and will now pay the price.

    Since you are now supplementing your tenants rent it will be to your advantage to find a new tenant if you can transition smoothly. You will be in control and it will be a win for you either way. Do not hesitate, do not stall push for a immediate signing of the lease regardless of which tenant you choose. Make sure you get the cash up front if you go with the new tenant. First and deposit, bare minimum deposit and first before you hand over the keys (cash only). 

     Thanks for the reply Thomas. I'm not sure if we can increase the rate that we previously gave the tenant due to Chicago rent increase notification laws. I generally agree with the "force the hand" solution you suggest, though they are good tenants so I know there's also a value in keeping a known/reliable renter. Thanks for your advice.

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  • Mark AinleyBusiness Member
    Property Manager · Roselle, IL (Chicago Suburb) · Member since 2013 · 2k+ posts · 1k+ votes
    7y

    @Gillian C. I am big on retention, especially if a low maintenance tenant.  Lots of risk with turnover and typically expense.  You will have to do something to the property so you have maintenance costs, you will lose at best a few days rent, so vacancy cost, and then you risk getting a tenant that complains all the time or is high maintenance no matter how well you screen.  Maybe there is a middle ground at $50 increase!  

    [email protected]630-781-6744Podcast Guest on Show #72
    GC Realty & Development LLC4.61066 Reviews
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  • Andrew Kougl
    Chula Vista, CA · Member since 2017 · 195 posts · 104 votes
    7y

    We are going through this now on our property in Chicago Heights. Tenant delayed and delayed and now finally tells our property manager they are leaving. I think they were just stalling while looking. But we are taking this as an opportunity to raise the rent, get a better tenant (selection was limited for the last one due to it being winter), and possibly vet for a new property management company. Sometimes a fresh start is the best option. Fingers crossed for your situation. The important thing is get the deposit from the new tenant, until you get that financial commitment it means nothing. 

    2Reply
  • Margie Niedecker
    Member since 2019 · 3 posts · 1 vote
    7y

    What's the original lease state regarding renewal?  Automatically renews, same terms, switches to month to month?  When you sent the increased rent letter, did you provide a deadline?  Not sure what Chicago rules are, but normally since you notified them of the increase, they've missed their opportunity (normally 60 days) to notify you they were vacating.  Whether they sign the new lease, the increase already takes affect.  They've missed their opportunity to terminate if the original states 60 days prior.  In which case, if they terminate now, they are breaking the lease - as it's already renewed.

    In the future, send that letter 75 days with a 15 day deadline.  Allowing them to provide you a full 60 day notice to vacate.

    1Reply
  • Gillian C.
    OP
    Chicago · Member since 2019 · 27 posts · 13 votes
    7y

    Thanks all for these helpful tips. Here's the conclusion for those interested:

    We showed the apartment at $1575 and had 7 people come through. Four were immediately interested, Two wanted to sign a lease same-day. We decided that although we had a good option with the new higher-priced tenants, that we would tell our current tenants they had one day to sign the lease or it would be given to another renter. @Mark Ainley we considered your $50 bucks idea, but didn't end up doing that because 1) we weren't sure if that was legal in Chicago (you need 60 days to announce an increase and 30 days to tell them to vacate, and we were at about day -40) and secondly because we had not communicated to them "if you don't tell us before we show it, the price may increase". We probably could have done this without an issue but felt it was more ethical to honor our offer and give them one last chance.

    They're good, low-maintenance tenants and they also don't seem to mind at all when we come in to make improvements to the apartment, so we're thinking that our lower (but still increased) rent is justified with 1) peace of mind of tenants we know, 2) no apartment turnover costs and 3) ability to do small improvement projects while they are living there.

    @Margie Niedecker thanks for these thoughts. I will keep this in mind when offering them a new lease - need to dive deeper into our tenant laws regarding the timelines to vacate and build leases to make sure we're protected on this front.

    @Andrew Kougl good luck with your new tenants. Our takeaway from this process is to be prepared well in advance (I like Margie's suggestion of letting tenants know 75 full days in advance) and also be clear about the timeline of looking for new tenants. "If you don't accept by date X we will list the apartment. Once the apartment is listed the renewal offer is subject to increase by date Y." Putting a timeline on everything is really helpful and forces them to make a decision because there are clear, tangible consequences to waiting.

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  • Kelly N.
    Investor · SE, MI · Member since 2013 · 1k+ posts · 461 votes
    7y

    Here's what we do:

    Give them notice that the rent will increase with the next lease (usually 6+ months before the new 12 month lease would start- this is typically when people in the area start looking for housing).

    Give them a date to let you know what their intentions are (we give them 3-4 weeks) and let them know that if they aren't staying, or you haven't heard from them, you wills start marketing the apartment to others at $XXX rent (which will be more than what their rent would have increased to).  If they wait to let you know til after you have started marketing the apartment, they pay the higher rent...  

    If they want to stay, give them a date to sign the lease by (I give them another 4 weeks)

    Start marketing the apartment if they haven't given you a firm answer by the date indicated, or if they haven't signed the new lease by the date indicated.  Usually, if people are on the fence (typically a group of roommates deciding what to do) bringing new potential tenants in to see the place (or even just scheduling a showing) will push them into a decision.

    1Reply
  • Gillian C.
    OP
    Chicago · Member since 2019 · 27 posts · 13 votes
    7y
    Originally posted by @Kelly N.:

    Here's what we do:

    Give them notice that the rent will increase with the next lease (usually 6+ months before the new 12 month lease would start- this is typically when people in the area start looking for housing).

    Give them a date to let you know what their intentions are (we give them 3-4 weeks) and let them know that if they aren't staying, or you haven't heard from them, you wills start marketing the apartment to others at $XXX rent (which will be more than what their rent would have increased to).  If they wait to let you know til after you have started marketing the apartment, they pay the higher rent...  

    If they want to stay, give them a date to sign the lease by (I give them another 4 weeks)

    Start marketing the apartment if they haven't given you a firm answer by the date indicated, or if they haven't signed the new lease by the date indicated.  Usually, if people are on the fence (typically a group of roommates deciding what to do) bringing new potential tenants in to see the place (or even just scheduling a showing) will push them into a decision.

     This is great advice that we should have implemented several months ago. We'll be on top of this process going forward.

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  • Kelly N.
    Investor · SE, MI · Member since 2013 · 1k+ posts · 461 votes
    7y

    @Gillian C.- glad to help- someone else might as well learn from my mistakes besides me!  

    1Reply
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