It's Okay to Let Good Tenants Go
A very good long-standing tenant of mine recently gave notice to move. Of courses I’m not thrilled at the prospect of having to find another renter but I’m accepting it and a little excited about it. Why on earth am I excited about having a long-time good tenant leave? Market rent.
For starters, this tenant has been in the property for 8-9 years. A good tenant. Quiet. Very few work orders. Does random acts of kindness for me as the owner. Great guy. I’ve been in this guy’s shoes before. I remember when I was renting I got a version of the seven-year itch. I started to dislike going home. I started spending more and more time away from home (much to the displeasure of my disabled husband). I was actually depressed by my environment I’d been there so long. When I got my tenant’s notice, a little of my personal experience played into my reaction. But even more was the realization that I could now more easily get the unit up to market rent.
The market I invest in is changing. Big time. In a good way. Rents are going up almost exponentially. For those of use operating middle class rentals, it’s great news. But it’s “appreciated” so much that it’s difficult to keep up when the units are occupied. Very few people will stick around when you get a $25 or more rent increase. They will instinctively move-on.
Part of the logic is “well if I’m going to be paying more...I may as well move somewhere else because I want to be closer to Target…[or on the other side of town, etc]”. Basically they will rationalize their reason for moving with anything that could possibly be out of your control. They just don’t like spending more money on the same thing. It’s like when you get a notice from your cable company that your bill is going up. Your getting the same services, but your bill is going up.
I know I will have to put money into the unit. I will have to get carpet and vinyl but in my mind it’s for the better of the portfolio. I’d rather spend $1200 getting the unit ready, bring the unit rent up by $100 and be at market rate sooner. Even if the tenant only lasts one year I will have the unit revamped and have paid off the turnover. If the market goes up again, I can tack another $10 on if the tenant stays.
Plus, I won’t lie. I’m a little excited by the creativity and possibilities that come with a unit rehab.