Hi all,
I am looking for some advice regarding renewing a tenant's lease that is set to expire soon. I reached out to them to renew and offered a 1 year lease at the same rent they are paying now or a month-to-month lease at a higher rent (4% increase). They had expressed that they may be buying a house in the next year so I wanted to offer a choice. However, they said that they wanted to sign a shorter lease period instead (9-10 months with the option of going mo to mo after). I told them no as I just told another tenant at a another property no regarding a shorter lease and offered the same 12 month or month-to-month option, and I want to be consistent and fair. The tenant is now not responding for the last 2 weeks, and I'm not sure how to proceed. Any advice? Thank you!

I would reach out once more, just to confirm their options and when you need a decision by.  Once you've set that deadline, if they haven't signed a lease yet, let them know that you'll be listing the property (for rental) and for them to be prepared for walk-throughs.

Sounds like you'd like them to stay, so I'd try once more with them, just to avoid the turnover pain.

Have you considered the implications of the 9-10 month lease?  Your property would become available in the early spring, which seems favorable for most markets.  It might be worth the "inconsistency" since it's favorable to your business.

Most leases in most states automatically become month to month if they don’t move out. If you’re ok with keeping them at month to month, problem solved. Personally I have no patience for people that can’t find 1 minute to respond and may be tempted to not renew that lease. 

Jodi

When this happens I reach to them via certified mail  and first class mail (send both) telling them one of the following: 

I underhand how life can take over and cause you (the tenant) to not find the time to contact me regarding the lease situation we discussed.  While I do not want to lose you as a tenant I understand that you have choices to make, as do I.  Because we have been unable to discuss this matter further, I have enclosed a the required Notice of Rental Increase to $    ($ + 4%) {or if you want to terminate the tenancy , a Notice of Termination}.

This usually gets their attention and they quickly call. If they do not call then you are going to receive a higher amount you wanted. 

Either way these tenants are thinking of terminating the tenancy so why not "assist" them? 

What is key for you is that you are getting what is fair on your terms.   

You can be fair and nice at the same time - trust me they may not think of it that way but you know you are right.

Hope this helps...

Steve   

  Bill Brandt - Isn't that the truth - cannot call, text, or email in response for 2 weeks?   Time to go "legal" on them... 

@Kristel Knittel Thanks for your feedback! They did confirm actually that they wanted to stay, but then they didn’t want to agree to the lease terms. I considered letting them do a shorter lease since I agree it wouldn’t be terrible to have it end in the spring, but I also don’t want them to get in the habit of negotiating and dictating the terms. I have a feeling they will stay for a while and not buy a house because of conversations I’ve had with them previously. 

@Jodi Roberts - yeah.  Negotiating the terms when they're favorable to you, that's something I'm always up for.  Anytime you can make it a win-win!

And if spring comes and they still have cold feet on buying - you'll at least have had another 9 months of rents without turnover, at the very least.

@Steven Warner Thanks for the idea Steve! I will definitely go that route soon if I don’t get a reply.

@Bill Brandt The lease goes month to month after it expires, but I don’t think I can increase the rent without having them  agree to it by signing a new lease? I wanted to charge more for month to month since I can’t control when it will end.

As someone who has mostly been a renter due to a lot of relocations, I very much appreciate when a landlord can work with me on lease expiration and not insist that I go month to month just to get more money out of me. One time it ended up that we were expecting a baby two weeks before our lease was up and moving with a newborn would be a nightmare, but they would not let us extend our lease for one or two months unless we wanted to go month to month at an ungodly rental rate. I truly do not understand what difference it makes.

We do own one SFR as a rental (due to a relocation actually) and we are flexible on this kind of stuff because I believe in treating people how I would want to be treated, even in business. As long as we get our money as agreed and nobody is trashing the place, I'm happy.

@Jodi Roberts

Even though you can’t control when it will end, they still have to give notice, and you likewise can also terminate with notice if something goes south. Do you live up north where it’s harder to turn a rental in the winter? If not, as long as they give 30-60 days notice (whatever it says in the lease and/or whatever your state laws say), I don’t see why it matters that much. Either way, you will know ahead of time. We have it written into our current lease with our tenants that after the first year, it will go month to month (no rent increase bc our rate is already maxed out for our area) and they have to give 60 days notice to terminate. They have been there two years now.

@Jodi Roberts

Normally the MTM would be the same rate, but not if you’ve told them ahead of time that their options are the same rate for a year or a higher rate for MTM. You’ve notified them of your MTM rate before the lease expired. Some places it’s 30 others it’s 60 days. I send out notices 90-120 days in advance. Almost every tenant I deal with knows 4 months in advance if they’re planning to move. I get responses within 2-3 days even that far out. But if they don’t reply they’ve agreed to the higher MTM rates, at least in Nevada. (I usually do same rate for 2 year extension, plus $50 for 1 year and plus $100 for MTM.)

@Bill Brandt Oh ok, thanks Bill! I appreciate your feedback