First Multi, Inhereted TAW with mixed security/LMR payments

[Joshua Johnson]

Hello All,

In January I took control of my first multifamily in Worcester, MA. The tenants I inherited are all TAW, but have agreed to sign onto a fixed 1-year lease beginning in June'22. They came with a mixed history of deposits and the way they structured the living/paying situation is a bit unconventional. the first floor unit is a 2BD currently set up as a 1 BD with one female living in it. The second floor is a 3BD with three men, they are all buddies and split the rent for the whole house 4 ways, each paying the same amount. Im fine with this, as long as they're paying. but when it comes to writing the new lease, im unsure of what to do. 1 lease for the whole house? 4 leases for each individual? a lease for each floor? but then how do i write up what the payments are for each unit? im sure im overthingking this but i would so appreciate some feedback.

additionally, as i mentioned, they have a mixed deposit history. my first floor female has $500 deposists for last & security, although her indivdual rent payment on the new lease would be $650. two of the boys upstairs have only security deposits of $625, which i supppose can go to last month if it is not necessary for damage reparations. and the third upstairs tenant has paid $625 for both security and last month. 

Truly I do not think I can ask them to come up with additional payments to complete their deposits. I guess my question is how would you structure a lease in this situation where they all communally pay for the whole house together, equally, but do not all have equaly "skin in the game" when it comes to security. 

any feedback would be so appreciated, thank you
  

[Nathan Gesner]

Joshua, I recommend their deposits and the last month's rent be brought up to match the current rent rate. The value of the rental doesn't depend on how many people are living there. The three men should have no problem paying extra to increase the deposit and last month. The single female may have an issue, but that just indicates she's renting something unaffordable.

Give them the option of signing a one-year lease and they have to increase the last month's rent and deposit. If they can't afford it, tell them it's time to go so you can find a renter that can afford market rates.