What is a good tenant worth?

[Pat Jackson]

I looked a duplex about a month ago, and have been meaning to ask this question since.  This is an up/down duplex.  Each unit is 3 bedroom, 1 bathroom.  Already 100% rented.

The top unit rents for $575, could probably be raised to $600.  Nothing really not note, it was a nice unit.  The downstairs is nicer, and has a very long term tenant, he pays $465.  His unit is certainly worth $600 a month.  Let's say I'm wrong though, and it's only worth $575.  That's $110 less or "loss".  Before one screams raise the rent, here me out....

1.  He's been there for 5+ years and doesn't want to leave.  He's probably 60, and pending some catastrophic event, from what I can tell he wants to stay there till he dies.

2.  He mows the yard with his own mower, which is a value of $500-$550 a year.

3.  He takes immaculate care of the place, he tends a nice garden, planted rose bushes, a peach tree, all sorts of stuff.  This house is in a C neighborhood, and it has the nicest yard on the street because of his efforts.

4.  He loves the place and was there the entire time I saw his unit, talking about the whole thing.  Really proud of his home.

5.  On #4, he is a bit of a character.  Type of guy that will talk your ear off.  I'd have a property manager so it's not a huge deal to me, but just fyi.

So if I bought this, and lost $1320 in rent, got $500 back in value from lawn care, we're now talking $820.  So what's a good tenant worth?  Raise the rent to $575-600 (he'd likely leave as he's on partial housing assistance), raise partway and hope he stays, or leave as is and have a "good tenant"?

[Tommy F.]

@Pat Jackson

Do your numbers work based on the current rents? Looking from a different angle, what does a bad tenant cost? Headaches, nit-picking repairs, slow rents, damage, lawn care, decline in upkeep and appearance, etc. You say the guy loves the place, takes immaculate care for it, mows the lawn (I suppose it's not a requirement), gardens, etc.  Are his current upkeep efforts a contributing factor to the purchase price? You say it's the best place in the neighborhood.  Is it because of him or the current owner?

Using your analysis of a net $820 loss of annual income, is it worth a possible month vacancy, expense of turnover cleaning, and management expense to place new tenant? If the numbers work going into the deal, I would leave the guy in place, but let him know a modest increase will occur at next lease renewal. If he's on fixed income, it will cost him more to move than pay another $10 - $20 per month. Good luck.