Conversion of a tenant to month-to-month

[Sam Leon]

Have a bit of a unique situation.

Got a tenant in a SFR 3/2 property. When he first rented the place he just got divorced and was looking for a place. He is the only occupant other than weekend visits by a 10 year old daughter. No pets nothing. He owns a restaurant and worked 7 days a week 16 hours a day and he's never home.

Perfect tenant, right?

In a sense, yes, less, wear and tear.

But paying rent has been a nightmare, he just never have time to pay, I send email reminders, and still it's late all the time. I implemented late fees, and he pays it, not a big deal.

So come renewal time, he said he really doesn't use the house, and he wants to find a 2/1 apartment instead of a 3/2. I happen to have a 2/1 apartment near there but it's occupied. So he wants to move out, but won't be ready at the renewal time because he's too busy working 16 hour days.

I asked him how long will it take for him to find a place, he thought about it and said 3 months. So I said, OK, why don't we do a 3 month renewal? He said OK, I sent him a 3 month lease renewal, got that done.

Now, that lease is up again, in 30 days. But he hasn't found a place, because he's too busy working 16 hour days. But he is sure he wants to find another place.

I asked him how much longer? He said may be another 3 months.

But oh, he is also dating his ex-wife again, so there is a chance of getting back together. So good news, if they get back together, he can move back in to his 4000SF house.

Then he told me why they broke up. He's never home. He works 16 hour days, he's too busy!

His restaurant opens at 10 and close at midnight, he's there before it opens and stays after it closes.

But I am digressing. So this is probably a perfect situation to just convert to a month to month lease, right? Just a 30 day notice and that way no need to worry about exactly how much longer he needs, I bet he doesn't know himself if the time frame depends on whether he can find another place and whether he can get back with his ex-wife, and both scenerios seem to depend on how he can budget time!

#2 is the rent amount. Over the last 15 months the rent has gone up. So I am below market rent at that property. Seems a change from yearly to 3 month to month to month may be a good time to raise rent. But should I? It's a tenant on his way out, not a new tenant looking to stay a while, should I bother to raise rent in this situation?

#3 is I always ask for first, last, and security upon move in, basically 3 months worth. At the end of the lease, the last month is "free", well not free but prepaid. So in converting this to month to month, it seems I need to return the "last month rent" to him because it makes no sense in a MTM structure.

[Gerald K.]

Originally posted by @Sam Leon:

Let me clarify.

We are already at the end of the 3 month lease.

I normally don't do anything less than a year, but when he estimated he needed another 3 months I made an exception.

So now I am thinking the only thing that makes sense is MTM from here on out.

I have his security deposit AND last month rent, paid when he signed the original lease, 15 months ago.

Therefore the last month is this month, he doesn't need to pay. I still have his security deposit.

Since he indicated he's not yet ready to move or doesn't know what he's going to do yet, just keep his last month's deposit and have him pay as usual. Does your lease automatically become a month to month if a new lease is not drawn up? It appears a rent increase and going on a month to month agreement would make the most sense in this situation. Since he's at work most of the time, I wonder if sending rent bill to his work would help?