Renter of 16 years just moved out.

Joe S.Pro Member

Investor · San Antonio · Member since 2020 · 3k+ posts · 3k+ votes

Bitter sweet today. I had a renter of 16 years they just moved out due to a job transfer out of state. That has been the longest renter I’ve ever had.

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Greg M.

Rental Property Investor · Los Angeles, CA · Member since 2017 · 2k+ posts · 5k+ votes

Originally posted by @David P.:

Going on 11 years with one here in Southern California. Inherited them when i purchased the property. Best tenants ever. They always pay a day early or on the 1st. They are paying slightly under market $600/mo less than the other unit behind it but I rather keep them happy.

Unless you're renting a beach house for $10K a month, $600/month under market is insane just to keep tenants happy. That's $7K+ a year you are losing. How many hours do you have to work to earn $7K? They'd probably be thrilled to be paying $200 under market and you'd have an extra $5K a year in your pocket.

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Nicole Heasley Beitenman
Investor · Youngstown, OH · Member since 2017 · 2k+ posts · 2k+ votes
4y
That's amazing!!
4 Reply
Rex Petersen
Investor · Pittsburgh, PA · Member since 2021 · 39 posts · 50 votes
4y
Ok Joe, tell us your secret to keeping a renter happy for 16 years! (and it better not be that you never raised the rent in all that time :)
8 Reply
David P.
Member since 2020 · 404 posts · 235 votes
4y
Going on 11 years with one here in Southern California. Inherited them when i purchased the property. Best tenants ever. They always pay a day early or on the 1st. They are paying slightly under market $600/mo less than the other unit behind it but I rather keep them happy.
2 Reply
Joe S.Pro Member
OP
Investor · San Antonio · Member since 2020 · 3k+ posts · 3k+ votes
4y
Originally posted by @Rex Petersen:
Ok Joe, tell us your secret to keeping a renter happy for 16 years! (and it better not be that you never raised the rent in all that time :)

It was probably more on them that they were content to live there that long. I probably started it off at the top of the rent for that area and then for a number of years the area declined just a little bit. The people have consistently paid late enough to add in a late fee with the payments. So if you add the two together I’ve been getting market rent at least for the majority of the time. I have never raised their rent, but the area did not demand it and they were not demanding.
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Greg M.
Rental Property Investor · Los Angeles, CA · Member since 2017 · 2k+ posts · 5k+ votes
4y
Originally posted by @David P.:
Going on 11 years with one here in Southern California. Inherited them when i purchased the property. Best tenants ever. They always pay a day early or on the 1st. They are paying slightly under market $600/mo less than the other unit behind it but I rather keep them happy.
Unless you're renting a beach house for $10K a month, $600/month under market is insane just to keep tenants happy. That's $7K+ a year you are losing. How many hours do you have to work to earn $7K? They'd probably be thrilled to be paying $200 under market and you'd have an extra $5K a year in your pocket.
9 Reply
David P.
Member since 2020 · 404 posts · 235 votes
4y
Originally posted by @Greg M.:
Originally posted by @David P.:
Going on 11 years with one here in Southern California. Inherited them when i purchased the property. Best tenants ever. They always pay a day early or on the 1st. They are paying slightly under market $600/mo less than the other unit behind it but I rather keep them happy.
Unless you're renting a beach house for $10K a month, $600/month under market is insane just to keep tenants happy. That's $7K+ a year you are losing. How many hours do you have to work to earn $7K? They'd probably be thrilled to be paying $200 under market and you'd have an extra $5K a year in your pocket.

Ya I do think about it but I got the property during the crash so basically they are covering the mortgage already and the other unit is all gravy. I raised rent on them once already from 2k to 2400 few years back but rent as steadily grew since then. They are very low maintenance and treat the property well.
2 Reply
Alecia LovelessPro Member
Member since 2019 · 3k+ posts · 2k+ votes
4y
@Joe S. This year with a purchase I made I inherited one at 7 years and one at 20 years. Both pay very close to market rent and always early. As they are month to month I figure I will give them at least a year and then raise the rent a little closer to market as I know they got raised substantially about 3 months prior to the property going on the market and my purchase of it.
The 20 year tenant has gone from $450-$775 during his tenure. The going rate is $825, but I don’t want to go there all at once as I know he’s on his retirement and SS now. He’s 78 years old. I’d prefer to keep him until he no longer is able or no longer wants to stay living there.
5 Reply
Michael Williams
Rental Property Investor · Sacramento, CA · Member since 2017 · 202 posts · 82 votes
4y
Now you're able to renovate/update the unit and raise the rent, hopefully above market value for your area.
1 Reply
Casey Caton
Investor · Member since 2017 · 69 posts · 65 votes
4y
@Joe S.
That is awesome! What do you think helped keep a tenant for those 16 years? I’m guessing your next steps will be to do some cosmetic updates, raise rents, and get another 16 year tenant?
1 Reply
Jon KellyPro Member
Investor · Bethlehem, PA · Member since 2016 · 929 posts · 951 votes
4y
@Joe S. Sad day, Joe. We feel your pain : (
2 Reply
Patrick M.
Rental Property Investor · Red Bank, NJ · Member since 2017 · 1k+ posts · 1k+ votes
4y
My tenants are young professionals, good for 2-3 years. With the way my market is going I welcome a move out! Even when it wasn't this red hot I welcomed it.

I don't understand this fear of turnover. I love it and I am always financially better for it.
2 Reply
Joe SplitrockPro Member
Moderator
Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
4y
You mentioned not raising rent in 16 years, so I am betting three things:
1. You will have some rehab costs. That is fine, take the opportunity to upgrade the property and get the expenses as a deduction your taxes for this year. Hopefully you can take advantage of some 100% bonus depreciation to get a nice offset for your 2021 taxes.
2. If the rehab is done right, you should be able to get a considerable increase in rents. Had you raised rents 3% every year, current rents would be 56% higher than where you started. For example, starting at $1000, you would be getting $560 more per month.
3. A properly done rehab could increase value considerably and may open the door to a cash out refinance. This could be a power play for you, but unlocking the equity and increasing return.
I understand turn overs can be a pain, but in a situation like this, there is considerable upside opportunity for you. Best of luck Joe!
3 Reply
Joe S.Pro Member
OP
Investor · San Antonio · Member since 2020 · 3k+ posts · 3k+ votes
4y
Originally posted by @Casey Caton:
@Joe S.
That is awesome! What do you think helped keep a tenant for those 16 years? I’m guessing your next steps will be to do some cosmetic updates, raise rents, and get another 16 year tenant?

I believe that the largest factor to long-term tenants is the tenants themselves. Some people settle into a place and accept that as their lot in life. Moving can be a lot of work as well.
1 Reply
Wale LawalBusiness Member
Real Estate Broker · Houston | Dallas | Austin, TX · Member since 2018 · 5k+ posts · 2k+ votes
4y
@Joe S. 16 years is something to celebrate. Did you inherited your tenants, or did you pre-qualify them yourself? Also, what do you look for in tenants in the pre-qualification process?
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Joe S.Pro Member
OP
Investor · San Antonio · Member since 2020 · 3k+ posts · 3k+ votes
4y
Originally posted by @Wale Lawal:
@Joe S. 16 years is something to celebrate. Did you inherited your tenants, or did you pre-qualify them yourself? Also, what do you look for in tenants in the pre-qualification process?

I did not inherit them. I placed them there myself. It was more of an accident than a skill level on my part that they stayed so long.
0 Reply
Wale LawalBusiness Member
Real Estate Broker · Houston | Dallas | Austin, TX · Member since 2018 · 5k+ posts · 2k+ votes
4y
@Joe S. Well, congratulations for the second time. I can assure you made a lot of us jealous. Keep doing what you are doing, and wish you all but the best. Good luck!
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1 Reply
Scott M.
Real Estate Broker · Rochester Hills, MI · Member since 2009 · 2k+ posts · 2k+ votes
4y
Goodbye Unicorn : (
0 Reply
Gord Collins
Toronto, Canada · Member since 2018 · 20 posts · 12 votes
4y
Wow, well like Joe says, the upside for you is good. Your yield and balance are going to improve and you might have money to fix the place up. It's nice that many landlords tend to keep the rent static, but if the tenant is just wasting away as many do, and with costs and taxes rising, it might not be such a good favor. Hopefully, you'll do your vacancy advertising and marketing well and receive $2700 a month this time. You really should raise it by cost of living and at least keep your financial status quo. Good luck though!
1 Reply
Steve Vaughan
Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
4y
Originally posted by @Joe S.:
Bitter sweet today. I had a renter of 16 years they just moved out due to a job transfer out of state. That has been the longest renter I’ve ever had.

Nice. The unit will require some updating I bet.
I also have a 16 yr tenant. I've updated a few things for her over the years, but her rent is way below market. I just raised it to $850 in a $1200 building. She's a good person and tenant so I don't mind.
But an unsolicited offer for the building is coming in. I just did an updated rent roll and she stands out like a sore thumb. We worry about her if we sell.

1 Reply
Greg M.
Rental Property Investor · Los Angeles, CA · Member since 2017 · 2k+ posts · 5k+ votes
4y
Originally posted by @David P.:

I fully understand being content when you have good tenants, but there is a limit. At some point in life you're going to want to retire. If you're OK with coming to that point and then saying I'll work another 18 months because I didn't maximize my investment return and gave those nice tenants a rent break, that is fine. Personally, I want to retire as early as possible.
1 Reply
Joe S.Pro Member
OP
Investor · San Antonio · Member since 2020 · 3k+ posts · 3k+ votes
4y
Originally posted by @Steve Vaughan:
Originally posted by @Joe S.:
Bitter sweet today. I had a renter of 16 years they just moved out due to a job transfer out of state. That has been the longest renter I’ve ever had.

Nice. The unit will require some updating I bet.
I also have a 16 yr tenant. I've updated a few things for her over the years, but her rent is way below market. I just raised it to $850 in a $1200 building. She's a good person and tenant so I don't mind.
But an unsolicited offer for the building is coming in. I just did an updated rent roll and she stands out like a sore thumb. We worry about her if we sell.

I hear ya. I am raising the rent on another property and getting an updated lease to be marketable for a refinance.
1 Reply
Sonya Mays
Realtor · Milwaukee, WI · Member since 2015 · 7 posts · 8 votes
4y
16 years in one house shows a lot of stability, some people move around every few years or every other year, sometimes people stay because they have kids in the school district and they don't want to disrupt the stability for their kids or family. At any rate, it seems like it was a good ride but as we know, all good things eventually come to an end and nothing lasts forever, enjoy it while you can and prepare for the next chapter to be your best chapter yet, onward and upward my friend!
1 Reply
Matt M.
Specialist · Easton, PA · Member since 2018 · 1k+ posts · 2k+ votes
4y
@Joe S.
I bought a house in 2019 that was rented to the same tenant for 43 years. When they left in August 2019, they were paying $700. I rehabbed it and am getting $1450.
1 Reply
Joe S.Pro Member
OP
Investor · San Antonio · Member since 2020 · 3k+ posts · 3k+ votes
4y
Originally posted by @Matt M.:
@Joe S.
I bought a house in 2019 that was rented to the same tenant for 43 years. When they left in August 2019, they were paying $700. I rehabbed it and am getting $1450.

Some people rent forever when they could’ve already paid for a house.
1 Reply
Nathan GesnerBusiness Member
Moderator
Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
4y
Originally posted by @David P.:
Going on 11 years with one here in Southern California. Inherited them when i purchased the property. Best tenants ever. They always pay a day early or on the 1st. They are paying slightly under market $600/mo less than the other unit behind it but I rather keep them happy.

I have hundreds of tenants that pay rent on time every month and they pay market rate. $600 a month is $7,200 a year in lost income. They pay their rent like clockwork because they don't want to lose their generous benefactor that subsidizes their housing! Think of it this way: you're essentially paying your tenant $7,200 a year to live in your rental. In five years, that's $36,000 you've paid them. There's a very good chance they'll be smart enough to save that money up and use it to purchase a home, which means you donated money to help them buy a house and build wealth.

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