Lease Terms Offering Question
I recently acquired a 12 units apartment in Tennessee and self-managed since I want to get experience in management. I need to renew all my tenants' leases so I went ahead and served them a letter like what's at the bottom.
I wanted to offer the tenant some incentive with monthly rent if they sign the lease early with rent increasing earlier than 90 days. One of my tenants seems to have misunderstood and thinks the $800 rent offer still applies if they sign the lease early and pay rent of $800 starting from February 1, 2023. I feel like did make a mistake of not explicitly saying when the lease would start.
Now I am not sure what I should do. Try explaining what I want to offer to the tenant. None of my tenants have signed the lease yet. I want to make the terms I am offering clear to the tenants.
This is the letter I sent to tenants about the rent offerings.
Dear Tenant,
Thank you for your tenancy at Apartment! We’ve really appreciated having you here. It is a privilege to be able to work with you, and we thank you for your business.
According to our records, it appears that your lease term is coming up and, as such, we need to discuss your future plans. Due to the naturally increasing cost of property taxes, insurance, and maintenance costs of the building. In order to keep pace with those expenses the cost of renting your home will increase as well. The state of Tennessee requires that you are served with a 30-day written notice of a change in your rent. We are serving you a 90-day written notice of a change in your rent.
Please choose from one of the following options for your future at your home.
Sign a new one-year lease at $850 per month, which will begin on February 1, 2023, and end on January 31, 2024.
Sign a new six-month lease at $875 per month, which will begin on February 1, 2023, and end on Jul 31, 2023.
Sign a new month-to-month lease at $900 per month, which will begin on February 1, 2023.
DISCOUNTED RATE: One-year lease at $800 per month if the lease is signed before November 30, 2022. Six-Month lease at $850 per month if the lease is signed before November 30, 2022. The deadline for both of these offers is November 30, 2022.
Please return this form and let us know your plans by November 4, 2022, so we can make that work for you. You can email the form or call us.
NOTE: The old owner had an agreement where the tenant and landlord have to give 90 days' notice for any changes(Termination, rent increase, etc..).
Quote from @Neel Patel:
I don't see why this is confusing. If the sign the lease prior to November 30, their lease will be $800 a month effective February 1, 2023.
I wouldn't offer a discount for signing early. You're essentially paying your Tenant $600 to sign early when there's a very good chance they'll just sign it at $850.
Nothing has been signed, so write up a short, very clear explanation/example.
Quote from @Nathan Gesner:
Quote from @Neel Patel:
I don't see why this is confusing. If the sign the lease prior to November 30, their lease will be $800 a month effective February 1, 2023.
I wouldn't offer a discount for signing early. You're essentially paying your Tenant $600 to sign early when there's a very good chance they'll just sign it at $850.
Nothing has been signed, so write up a short, very clear explanation/example.
Thank you @nathan for your reply. I wanted to just make sure of not breaking any state laws by backtracking on what is already stated in the lease agreement offer letter.
@Nathan Gesnerundefined
Quote from @Neel Patel:
General contract law says you do not have a contract until all parties have signed and the contract is delivered. You've made an offer, but they haven't accepted it. You can always retract the offer and give them a new one, or give them nothing at all.
Quote from @Nathan Gesner:
Quote from @Neel Patel:
General contract law says you do not have a contract until all parties have signed and the contract is delivered. You've made an offer, but they haven't accepted it. You can always retract the offer and give them a new one, or give them nothing at all.
One of the tenants reached out to me and said they are ready to sign the lease early with the effective date being February 1, 2023.
Quote from @Neel Patel:
Just contact them and make sure they understand exactly what they've agreed to so there's no confusion. Then contact the others before they sign and explain it to them.
Quote from @Nathan Gesner:
Quote from @Neel Patel:
Just contact them and make sure they understand exactly what they've agreed to so there's no confusion. Then contact the others before they sign and explain it to them.
Great, thank you for your suggestion. I let everyone know.
Quote from @Neel Patel:
I recently acquired a 12 units apartment in Tennessee and self-managed since I want to get experience in management. I need to renew all my tenants' leases so I went ahead and served them a letter like what's at the bottom.
I wanted to offer the tenant some incentive with monthly rent if they sign the lease early with rent increasing earlier than 90 days. One of my tenants seems to have misunderstood and thinks the $800 rent offer still applies if they sign the lease early and pay rent of $800 starting from February 1, 2023. I feel like did make a mistake of not explicitly saying when the lease would start.
Now I am not sure what I should do. Try explaining what I want to offer to the tenant. None of my tenants have signed the lease yet. I want to make the terms I am offering clear to the tenants.
This is the letter I sent to tenants about the rent offerings.
Dear Tenant,
Thank you for your tenancy at Apartment! We’ve really appreciated having you here. It is a privilege to be able to work with you, and we thank you for your business.
According to our records, it appears that your lease term is coming up and, as such, we need to discuss your future plans. Due to the naturally increasing cost of property taxes, insurance, and maintenance costs of the building. In order to keep pace with those expenses the cost of renting your home will increase as well. The state of Tennessee requires that you are served with a 30-day written notice of a change in your rent. We are serving you a 90-day written notice of a change in your rent.
Please choose from one of the following options for your future at your home.
Sign a new one-year lease at $850 per month, which will begin on February 1, 2023, and end on January 31, 2024.
Sign a new six-month lease at $875 per month, which will begin on February 1, 2023, and end on Jul 31, 2023.
Sign a new month-to-month lease at $900 per month, which will begin on February 1, 2023.
DISCOUNTED RATE: One-year lease at $800 per month if the lease is signed before November 30, 2022. Six-Month lease at $850 per month if the lease is signed before November 30, 2022. The deadline for both of these offers is November 30, 2022.
Please return this form and let us know your plans by November 4, 2022, so we can make that work for you. You can email the form or call us.
NOTE: The old owner had an agreement where the tenant and landlord have to give 90 days' notice for any changes(Termination, rent increase, etc..).
Hi Neel, I agree with @Nathan Gesner; I don't see why this is confusing. In the future, I wouldn't offer an early signing incentive and consider increase rents in stages. This allows you the ability to see what works and what doesn't.
I own a property management firm based just outside of Nashville, TN. If you ever need any assistance, please don't hesitate to reach out.
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@Neel Patel the only thing confusing is your sentance structure:
Due to the naturally increasing cost of property taxes, insurance, and maintenance costs of the building. In order to keep pace with those expenses the cost of renting your home will increase as well.
Those two sentances don't flow well!
Also, if you're going to survive as a DIY landlord, you need to become accustomed to tenants being lazy & stupid, playing stupid to set you up for a mistake they benefit from and out and out lying and being manipulative to get what they want.
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Get a property manager
Quote from @Blake Johnson:
Quote from @Neel Patel:
I recently acquired a 12 units apartment in Tennessee and self-managed since I want to get experience in management. I need to renew all my tenants' leases so I went ahead and served them a letter like what's at the bottom.
I wanted to offer the tenant some incentive with monthly rent if they sign the lease early with rent increasing earlier than 90 days. One of my tenants seems to have misunderstood and thinks the $800 rent offer still applies if they sign the lease early and pay rent of $800 starting from February 1, 2023. I feel like did make a mistake of not explicitly saying when the lease would start.
Now I am not sure what I should do. Try explaining what I want to offer to the tenant. None of my tenants have signed the lease yet. I want to make the terms I am offering clear to the tenants.
This is the letter I sent to tenants about the rent offerings.
Dear Tenant,
Thank you for your tenancy at Apartment! We’ve really appreciated having you here. It is a privilege to be able to work with you, and we thank you for your business.
According to our records, it appears that your lease term is coming up and, as such, we need to discuss your future plans. Due to the naturally increasing cost of property taxes, insurance, and maintenance costs of the building. In order to keep pace with those expenses the cost of renting your home will increase as well. The state of Tennessee requires that you are served with a 30-day written notice of a change in your rent. We are serving you a 90-day written notice of a change in your rent.
Please choose from one of the following options for your future at your home.
Sign a new one-year lease at $850 per month, which will begin on February 1, 2023, and end on January 31, 2024.
Sign a new six-month lease at $875 per month, which will begin on February 1, 2023, and end on Jul 31, 2023.
Sign a new month-to-month lease at $900 per month, which will begin on February 1, 2023.
DISCOUNTED RATE: One-year lease at $800 per month if the lease is signed before November 30, 2022. Six-Month lease at $850 per month if the lease is signed before November 30, 2022. The deadline for both of these offers is November 30, 2022.
Please return this form and let us know your plans by November 4, 2022, so we can make that work for you. You can email the form or call us.
NOTE: The old owner had an agreement where the tenant and landlord have to give 90 days' notice for any changes(Termination, rent increase, etc..).
Hi Neel, I agree with @Nathan Gesner; I don't see why this is confusing. In the future, I wouldn't offer an early signing incentive and consider increase rents in stages. This allows you the ability to see what works and what doesn't.
I own a property management firm based just outside of Nashville, TN. If you ever need any assistance, please don't hesitate to reach out.
Thank you, Nathan!
Quote from @Drew Sygit:
@Neel Patel the only thing confusing is your sentance structure:
Due to the naturally increasing cost of property taxes, insurance, and maintenance costs of the building. In order to keep pace with those expenses the cost of renting your home will increase as well.
Those two sentances don't flow well!Also, if you're going to survive as a DIY landlord, you need to become accustomed to tenants being lazy & stupid, playing stupid to set you up for a mistake they benefit from and out and out lying and being manipulative to get what they want.
Yes, I think I will need to make my notices better in the future.
Quote from @Eliott Elias:
Get a property manager
I appreciate your response. I am managing the property as I am trying to get into the management aspect of RE. I think I definitely need to get a mentor.
@Neel Patel
I think your wording is fine. People read what they want to hear. Just like listening you hear the parts you like and disregard the parts you don’t.
In the future, don’t offer a discount. The more wordy a document is the more susceptible confusion will take place. Always be super direct and try to avoid options.
As with all landlords, it is an ever evolving learning process even for property managers. I don’t think being a pm is that difficult. There are times when things become difficult. When those things arise, I call my attorney for the bizarre situation. He doesn’t charge for a quick question and answer.
I like to self manage as well.
Quote from @Kenneth Garrett:
@Neel Patel
I think your wording is fine. People read what they want to hear. Just like listening you hear the parts you like and disregard the parts you don’t.
In the future, don’t offer a discount. The more wordy a document is the more susceptible confusion will take place. Always be super direct and try to avoid options.
As with all landlords, it is an ever evolving learning process even for property managers. I don’t think being a pm is that difficult. There are times when things become difficult. When those things arise, I call my attorney for the bizarre situation. He doesn’t charge for a quick question and answer.
I like to self manage as well.
Thank you Kenneth for your input!
Yes, there is a lot of stuff that I have learned in just a couple of weeks of owning 12 units apartment. Definitely agree about keeping it simple and straight.