Should I Evict or Suck it up?

Question

Hi everyone,

I have a rental property in the Bronx, NY and my tenants have been living in there on a month to month basis since December 2021 (original lease started December 2020). I want to increase the rent but they already said there is no way they are paying more than what they are already paying. They also refuse to sign a new long term lease. They claim they are constantly looking for a new place to live in but it's been too difficult because of the current rental market.

On the positive side, they pay the current rate for rent every month and they take extremely good care of the property.

PITI is about $2200 and they are paying $2700. I estimate that I could probably get around $2900 for rent at market value.

I know evictions and vacancies can be very expensive for landlords hence why I am so hesitant but I'm looking to get other people's opinions on this. Should I go through with an eviction anyway?

I appreciate all the advise!

Ned J. · Answer

The are on a MTM, so its not an eviction.... not yet at least. You basically tell them their lease is up, give them notice that this is the new rent or you have 30 or 60 days (depends on your lease) to move out. Factors to consider... You just told them "this is the new rent" and they said "no, not paying it"...... you decide on who is in charge. You set the precedent on who is running the show. If you cave and go "ok...never mind", they now know you will cave with just some pushback. Unless you want to get run over, you have to stand your ground to some extent....not necessarily die on the hill.... but if you cave completely, you are dead in the water They don't want to pay more, but cant find a new place because "of the current market"..... yeah.... its even more expensive somewhere else and units are limited. So they cant afford to leave and you will likely find another renter pretty quick. Turnover costs $$$.....at another $200/month for the next tenant, how long is it going to take you to recoup the $$ lost for the turnover...... probably quite some time..... but depends on the condition of the unit and how quick/efficient you are on turnover. Tenant quality.... hard to put a price on it.... the next one may be a huge PITA or destroy the place. Is it worth an extra $200/month to take that risk? If they take extremely good care of the unit, thats a HUGE plus... Next year, they will probably be $300 under market.... $400 the next....so if you dont increase it sometime, you will just dig the hole deeper and deeper I'd set $100/month increase and set a fixed increase each year. Best I can do...take it or leave it.

Matthew McKee · Answer

Raise the rent to $2900/month but give them a $200/month credit so they are paying the same amount, your place is continually rented and your rent is increased to the market value so you don’t have to worry about future rent increase restrictions. Win/win/win

Bob Willis · Answer

If they leave and it sits empty for two months you are out $5400. Once rented, if you increase the rent by $200/month, it will take 27 months to make up for that. Is that worth it to you? But maybe it won't sit empty at all. But maybe the new tenants won't take good care of the property... So you can roll the dice and see if they will pay more by giving them notice. Also, not sure it is an eviction. You are just cancelling the month to month. But I don't know NY tenant laws.

Alexander Szikla · Answer

You do not have grounds to evict them if they are paying on time and take care of the property. Why don't you have them sign a series of 6 month leases at varying upcharges (i.e. $2,725 -> $2,750 -> $2,775)

Nathan Gesner · Answer

You are losing $700 a month or $8,400 a year. You are also dealing with a Tenant that feels they can dictate what you do with the property.I would give them the required notice and let them know that if they don't vacate, you will evict. On the first day possible, have an attorney start the eviction. Don't communicate with them unless it's to get them out even earlier. Most tenants will move out when they realize you are serious. Another option: let them know you will evict them, or they can leave within XX days and you'll pay them the money that it would cost an attorney and return their deposit. They may prefer the carrot over the stick.

James Wise · Answer

Seems like such a small increase won't pencil out when you factor in the unkown, vacancy and turnover repairs.

Bruce Woodruff · Answer

Usually I would be on the 'just evict them' side. But if they are really good tenants, I'd let them stay for a while. Have a meeting bring a spreadsheet showing your expenses, and explain to them that this is a business and you must stay close to market, especially because this is NYC. Give them a firm date (and stick to it) about when you will actually do the rent increase. That should keep everyone happy for a while. The only issue I would have is if they are not keeping the place up well....

William Arrington · Answer

This is the owner's conundrum. Do you keep the rent lower than market with a reliable tenant or do you slowly raise it up? Do you actually think they would leave at $200 more.. would they leave at $100. You probably have to do the 90 day notice (required if they have been there for 2 years) and see if they leave during that time. It does cost to move so there might be a number they would agree to and in some places you can still show a property even with tenants still in it (not sure about new york though). If the property is good and does not need alot of work you could have someone in within a month of them moving out

Arjay Estrella · Answer

@Ned J. Thanks so much your advise! Very helpful!

Arjay Estrella · Answer

@Bob Willis Hey Bob thanks for your reply! Sorry, yes initially I would have to give them a 60 day notice to terminate the lease. Ideally they would take me seriously and agree to the rent increase but I am afraid they won't and I'd have to go through with an eviction.