Tenant Moving Out Temporarily, Having Cousins Move In

Oakland, California
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Tenant Moving Out Temporarily, Having Cousins Move In

Austin Cai
New to Real Estate · Bay Area · Member since 2021 · 20 posts · 5 votes

Hi BP,

I'm a first time landlord so I wanted to get your guys feedback and advice on this. Basically, this tenant has been living in the unit for over a year now and have been consistent with their rents. They mentioned that they want to move out at the end of this month and relocate to another state for 6 months, after which they will move back (supposedly). In the meantime, they said their cousin's family will live there while they are away. The first thing I asked was if the new family was able to pay the current rent while they are staying there. 

I'm wondering if I should do a background or employment check on this new family and have them sign a new lease. In fact, I'm not sure what my options are. What happens if this new family is unable to pay the rent or decide to leave after 3 months? How should I go about this process? Thanks in advance! 


Best,

Austin

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Account Closed
Investor · Scottsdale Austin Tuktoyaktuk · Member since 2021 · 4k+ posts · 4k+ votes
4y
Quote from @Austin Cai:

Hi BP,

I'm a first time landlord so I wanted to get your guys feedback and advice on this. Basically, this tenant has been living in the unit for over a year now and have been consistent with their rents. They mentioned that they want to move out at the end of this month and relocate to another state for 6 months, after which they will move back (supposedly). In the meantime, they said their cousin's family will live there while they are away. The first thing I asked was if the new family was able to pay the current rent while they are staying there. 

I'm wondering if I should do a background or employment check on this new family and have them sign a new lease. In fact, I'm not sure what my options are. What happens if this new family is unable to pay the rent or decide to leave after 3 months? How should I go about this process? Thanks in advance! 


Best,

Austin

Treat them as new tenant "prospects" until you are sure it's the right thing to do.  Absolutely do a backrgound check. You don't know these people.

And, are you in a "no evictions" zone? If so, that puts a whole different perspective on things. You have to be even more diligent if you can't evict or if it's likely that the city/state will prevent evictions in the future.

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  • Joe Martella
    Rental Property Investor · Cherry Hill, NJ · Member since 2015 · 626 posts · 495 votes
    4y

    It depends.  If you allow the cousins to stay as “guests”, you can keep the original tenants responsible for the rents.  That is if you are ok with this issue.  You may still want to do a background and ensure the current tenants aren’t subletting the place.

    1Reply
  • Account Closed
    Investor · Scottsdale Austin Tuktoyaktuk · Member since 2021 · 4k+ posts · 4k+ votes
    4y
    Quote from @Austin Cai:

    Hi BP,

    I'm a first time landlord so I wanted to get your guys feedback and advice on this. Basically, this tenant has been living in the unit for over a year now and have been consistent with their rents. They mentioned that they want to move out at the end of this month and relocate to another state for 6 months, after which they will move back (supposedly). In the meantime, they said their cousin's family will live there while they are away. The first thing I asked was if the new family was able to pay the current rent while they are staying there. 

    I'm wondering if I should do a background or employment check on this new family and have them sign a new lease. In fact, I'm not sure what my options are. What happens if this new family is unable to pay the rent or decide to leave after 3 months? How should I go about this process? Thanks in advance! 


    Best,

    Austin

    Treat them as new tenant "prospects" until you are sure it's the right thing to do.  Absolutely do a backrgound check. You don't know these people.

    And, are you in a "no evictions" zone? If so, that puts a whole different perspective on things. You have to be even more diligent if you can't evict or if it's likely that the city/state will prevent evictions in the future.

    2Reply
  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    4y
    Quote from @Austin Cai:

    Two thoughts:

    1. If you decide to allow this, you should definitely screen the cousins and sign a new lease just like you would any other renter.

    2. Why are they so set on moving back into your house? I suspect it's because you are charging below-market rate so they want to take advantage of it. 

    Once you commit to renting to the cousins, it would be hard to deny their application. I would study the market well and see if your rates are low. If they are, I would tell the current renters that you won't hold it but intend to put it on the open market at current rates.

    The DIY Landlord Book4.7248 Reviews
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  • Austin Cai
    OP
    New to Real Estate · Bay Area · Member since 2021 · 20 posts · 5 votes
    4y
    Quote from @Nathan Gesner:
    Quote from @Austin Cai:

    Two thoughts:

    1. If you decide to allow this, you should definitely screen the cousins and sign a new lease just like you would any other renter.

    2. Why are they so set on moving back into your house? I suspect it's because you are charging below-market rate so they want to take advantage of it. 

    Once you commit to renting to the cousins, it would be hard to deny their application. I would study the market well and see if your rates are low. If they are, I would tell the current renters that you won't hold it but intend to put it on the open market at current rates.


     Yes, to your point #2. it is below market-rate currently but here's the conundrum that I have. Since I have a full-time job (unrelated to real estate) that got quite busy currently, I don't have the time to remodel and fix the unit if I were to tell them to vacate. However, I do have another tenant (middle unit) that is interested in renting out the unit we're speaking of. So there are a lot of moving parts currently. Most optimal situation I imagine would be that the cousins moving in pass the background check and can stay the allotted time. Otherwise, it will get quite complicated.

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  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    4y
    Quote from @Austin Cai:


    Hire a property manager. A good one should be able to help you with improvements, bump it to market rate, and bring in enough income to cover the cost of their management. It may even put more money in your pocket without you doing all the work.
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  • Theresa HarrisPro Member
    Member since 2019 · 15k+ posts · 11k+ votes
    4y

    Your lease should say they can't sublet which is essentially what they are doing.  If you do decide to let them do this, do a background check on the people moving in and tell them they cannot have other people move in.  I'd still tell the original tenant, that they are breaking the lease and then find new tenants and rent it at market value (factoring in the condition of the unit).  Also are utilities included and is usage likely to change with the new tenants?

    0Reply
  • Austin Cai
    OP
    New to Real Estate · Bay Area · Member since 2021 · 20 posts · 5 votes
    4y
    Quote from @Nathan Gesner:
    Quote from @Austin Cai:


    Hire a property manager. A good one should be able to help you with improvements, bump it to market rate, and bring in enough income to cover the cost of their management. It may even put more money in your pocket without you doing all the work.
    Where do you go to find good property managers? I've looked on Google/Yelp reviews and most businesses have low scores for some reason. Seems quite hard to find one that can be trusted. 
    0Reply
  • Austin Cai
    OP
    New to Real Estate · Bay Area · Member since 2021 · 20 posts · 5 votes
    4y
    Quote from @Theresa Harris:

    Your lease should say they can't sublet which is essentially what they are doing.  If you do decide to let them do this, do a background check on the people moving in and tell them they cannot have other people move in.  I'd still tell the original tenant, that they are breaking the lease and then find new tenants and rent it at market value (factoring in the condition of the unit).  Also are utilities included and is usage likely to change with the new tenants?


     That is a good point. However, the conditions inside are not optimal, and in an ideal situation I would like to fix it up first to increase the rent. If I rent it in it's current conditions, it will probably be around the same price they are paying. Utilities are not included so that does not effect my decision as much. 

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  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    4y
    Quote from @Austin Cai:

    Reviews are typically from disgruntled tenants that were evicted or that lost their security deposit. Very few people spend time giving positive reviews. When I get a negative review, I try to provide a professional response that shows our side if the story.

    The DIY Landlord Book4.7248 Reviews
    WebsiteView Page
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  • Matt K.
    Walnut Creek, CA · Member since 2015 · 3k+ posts · 2k+ votes
    4y
    Quote from @Austin Cai:
    Quote from @Nathan Gesner:
    Quote from @Austin Cai:


    Hire a property manager. A good one should be able to help you with improvements, bump it to market rate, and bring in enough income to cover the cost of their management. It may even put more money in your pocket without you doing all the work.
    Where do you go to find good property managers? I've looked on Google/Yelp reviews and most businesses have low scores for some reason. Seems quite hard to find one that can be trusted. 

     Where's the property, I might have some refferals.

    0Reply
  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    4y
    Quote from @Austin Cai:

    I'm wondering if I should do a background or employment check on this new family and have them sign a new lease.

    Why would you not do this? Do you want people with legal tenant status in your place that you don't know about? And ungoverned by any legalities like a lease? That could be your worst nightmare ever.

    Treat them just like new tenants if you choose to go this way. Frankly, I'd just use this opportunity to upgrade the place and get new tenants at market rate. It doesn't matter if you have a job, you're not going to be doing the work anyway. Get a small loan and bring it up to date. You'll be so much happier (and wealthier :-)


    1Reply
  • Austin Cai
    OP
    New to Real Estate · Bay Area · Member since 2021 · 20 posts · 5 votes
    4y
    Quote from @Matt K.:
    Quote from @Austin Cai:
    Quote from @Nathan Gesner:
    Quote from @Austin Cai:


    Hire a property manager. A good one should be able to help you with improvements, bump it to market rate, and bring in enough income to cover the cost of their management. It may even put more money in your pocket without you doing all the work.
    Where do you go to find good property managers? I've looked on Google/Yelp reviews and most businesses have low scores for some reason. Seems quite hard to find one that can be trusted. 

     Where's the property, I might have some refferals.

     It's in Oakland, CA
    0Reply
  • Wendy Man
    Member since 2019 · 104 posts · 35 votes
    4y

    I would suggest checking reviews, then interviewing, and checking references.  

    You can also ask for some similar properties that they manage, and do a quick drive by in person or on google street view to see how they look maintenance wise.  Can also check out how they market available properties.  Don't disturb the tenants unless you have permission though.  Be aware of that property managers are not cheap. My experience has also been that their vendors can be based on how convenient it is for them, and not necessarily based on best value.  

    Yes, agree screen the cousins. You can ask them to pay for the background check.

    0Reply
  • Wendy Man
    Member since 2019 · 104 posts · 35 votes
    4y

    Also check local laws, it can be that after a certain number of days, guests are no longer guests but turning into tenants under law, with the rights of tenants. Something to be aware of if you go down this road. 

    1Reply
  • Osazee Edebiri
    Realtor · San Jose, CA · Member since 2015 · 318 posts · 154 votes
    4y

    @Account Closed mentioned the most important thing which is you are in an area where you can't evict right now. So it doesn't really matter what you decide to do, but you have to put in some work to due your due diligence and make sure if you decide to allow the cousins to live there you background check them and have them sign a short-term lease for when the the current resident comes. 

    I would even go a step further and charge them a bit over what the current tenant is paying now, so that because your new rent, just in case they decide to stay, tell the current tenant it is connivence for holding the unit for them, which it is. Meet the cousins before they move in or do a zoom so you can get a feel of them. When you check their background you want them fit the criteria of people who care if their credit gets messed up, etc. If they don't pay your current recourse is small claims court, so you want to make sure they are people whom if you had to take them to small claims court would actually be affect if a lien was placed on them.

    The good thing you have going for you is the Tennant communicated this suggest to you rather than just doing on their own, so that to me is a pretty good indicator you have someone who is not trying to get over on you, they just want to keep their low rent. This doesn't mean the cousins won't try to get over on you. So communicate. You can even be creative and ask them for am additional holding deposit that they get back when they return. This gives you a little extra, just in case they don't pay.

    Hope that helps.

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