- Hello everyone -
I'm still a newbie to being a landlord (first time transitioning from old tenant to new) so I'm hoping some experienced people can help with how to transition from old tenant -> vacancy -> new tenant quickly without cutting corners on vetting.
- Recently renovated 2 Br, 1 Ba, ~1100 sq. ft. basement unit of up-down duplex just south of Denver. I inhabit the top unit.
- Tenant was excellent and will be in the property through the end of March (Started 1/20) - having her draft up a written notice saying she's leaving. Have a good relationship with her (would definitely be a reference) but moving out because she wants a place of her own.
- Don't anticipate many, if any, repairs other than nail hole and minor paint touch-ups
- Written into the lease that I can have prospective tenants visit while she's still there (with notice)
- There is room to increase rent by at least a couple hundred dollars/month (I made several improvements in the time that she's been
there) and it will still be reasonable
- She said she has a friend that may be interested in renting it
- Primary Questions:
- The most interesting thing to me, at this point, is the friend - she is familiar with the property and may be able to move-in quicker than someone new (Disclaimer: I have not spoken to her yet, just spitballing). However, she obviously will know the old rent price, making it harder for me to raise the prices to what I think I could get. If she passes background, etc., is it worth a smaller raise to limit vacancy and go with a better known commodity?
- What type of person/people should I look for that might stay in the property a bit longer term? It's in a great location - walking distance to grocery store, great bars/restaurants, concert venue and a light rail station that can take someone into Denver, etc.
- Showings: How do you typically handle the balance of showing the current tenant's space to a new prospect? She's neat, but is it weird that it's filled with someone else's stuff when they're looking at it? How do you talk with the new prospect about it?
- How have you handled the transition, timing-wise, from old tenant to new? With her leaving on March 31, it's not like I can just put someone in there on April 1st without doing the minor fixes, cleaning the place, etc. Right?
- What are other logistics I need to know about that I haven't mentioned (i.e. move-in, move-out checklist timing, etc.)?
I really appreciate everyone's thoughts and, if you've seen a good post of this topic before, I'd love the link to it as well.
The market rents in Denver have been increasing for several years so you don't have to justify to this prospect that you want or need to increase the rent. She should have to go through the same vetting process as any other tenant. The fact that the outgoing tenant knows her is nice but she still needs to qualify (income at 3x rent, minimum credit score, verifiable employment). I would talk to her and as you ask her questions about her qualifications let her know the market rent is increasing. If you really like her you could split the difference but don't take a loss just because she's a friend of a friend. Anyone looking for a place to live knows that other people have stuff so it's normal to view a property while it is occupied by someone else; that's part of the process. We usually turn over our properties within 24 hours because we require the outgoing tenant to clean and clean the carpet; this makes the process faster. If they don't, then we schedule it to be done quickly to avoid even one day vacancy. We have a handyman that does the repairs quickly. Not all repairs have to be done before a tenant moves in. It's typical for a new tenant to find things that need fixing, so we often wait until they are settled and have the handyman there to do it all on the same day; this also saves trip charges. This also assumes there is nothing major. If there is, then you can negotiate a delayed lease start with the incoming tenant if necessary. You may also need to work out any utility proration with the outgoing and incoming tenants. It will all work out fine, don't worry. Good luck!
Thanks for the pointers. I think there are some key differences on the vacancy point though. With you being a property management company, it's probably a bit more realistic for you to get a handyman in and out the exact night you need him. For small potatoes like me, I've found that the cupboards seem extremely bare when looking for contractors. Since the pandemic started, most of the ones I've tried to hire, for other purposes, either are booked up or barely want to give the light of day since doing a small job like this is probably barely profitable.
@Mike S. I totally understand. We are very small PM company (emphasis on small). We have also had challenges finding reputable and reasonable handymen. There aren't that many of them to go around and the ones that will do it, know they are in short supply so they can afford to be picky and pricey. Try calling CS Home Solutions in Denver and talk with them about what you have. You never know, they may be a good fit for you.
Have you seen this article? Covers more than the basic questions you're asking, but lots of good info about vetting tenants.
The rent is the rent. Charge what you think you can get. No need to do favors. Why not do an "open house" style for 2 hours on a Saturday?
Renters will understand about the current tenant being there.
A couple more questions for you with a quick hypothetical scenario to better explain: To keep numbers round, if my end goal is to receive $1200/mo ($1000 for rent and $200 for utilities)
- When you charge "rent" - how are you advertising/verifying someone's income? Do I advertise $1000 rent with $200 utilities or just say that rent is $1200?
- Is Rentometer only going by the "rent" number or including the utilities as well?
- When I'm doing the Income 3X Rent rule, do I use the "rent" number or "rent + utilities" number?
I would advertise it as "$1200, utilities included"; then specify on the lease which utilities you are including. When you phone screen/verify them, the 3x rent should be the $1200 since that's what they need to be able to pay you every month. If they can't afford the utilities along with rent, there is no point giving them an application. When doing comps in Rentometer, use the $1000 since that is the actual base rent. I am sure others will give you a different answer but that's how I would do it.