What should I do?

Question

Hi all! We have a house out in Austell,Ga that we've been renting out for the past 5 years. My older sister was the landlord up until recently when my mom asked me to take over. When my sister turned everything over to me, I realized a few things that has me feeling nervous;

1. Although the tenant has been there since 2010, the most current lease we have is the one she signed in 2010. and 2. She's been late A LOT and my sister has been letting her get away with it without telling us (of course that screwed up my mom's credit since the mortgage is in her name).

Since I'm taking over I obviously have a few things to discuss with the tenant but not sure how to approach it. Here are my plans:

1. Get her to sign a new lease ASAP. 2. Raise the rent to $1000 (she's paying $965, way too low for that area). 3. Have a stricter policy for late rent payments. 4. Have a good back up plan in case she decides to leave.

What is the best way to get this done??

Thanks for all your suggestions in advance!

Joel Owens · Answer

Toni has their been monthly or bi-monthly inspections of the property?? You need to keep a log and show repairs are made etc. It also gives an excuse to spot violations of the lease and how the tenant is keeping the property.

If the tenant is paying late likely  they cannot afford 965 much less 1,000 a month. What kind of file is on this tenant?? Do they make 3 times rent?? Are their people over 18 not allowed in the house without landlord approval that you need to qualify and add to the lease?? What kind of lease do you currently have?? Generally in GA once the initial lease term ends you keep going on a month to month basis with the lease term intact.

I would be cautious here and not move to fast thinking you are helping the situation. If for example you raise 35 dollars a month and tenant says they can't afford it or that they will pay but all these repairs have to be completed then likely the tenant will need to be evicted.

You will lose months of rent and pay court costs. Then if the unit has been lived in for years likely you will have to put in thousands to get it in rent ready shape again. So before you get that new renter in at let's be generous and say 1,100 a month you would be out close to 5,000 or 6,000. Can your mom take that kind of hit??

At 1,100 a month you bring in 135 more than before a month. It would take you about 3 to 4 years to reap any rewards from that off the losses. This is why landlords avoid turnover at all costs. You raise rents each year just enough to make tenant uncomfortable but not enough to move.

No legal advice.

Jon Holdman · Answer

Eh? @Toni Ricketts  If the tenant being late on the rent results in late mortgage payments you have a serious flaw in your business.  Depending on the tenant paying the rent means you lack the proper reserves to be in this business.  You must be able to make your mortgage payment and make it on time even if the tenant doesn't pay.  Sometimes they go from being late to disappearing.  Or worse.

IMHO this is a far more serious problem than the tenant's lease.  If you have to have the rent to make the payment then getting the rent is your top priority.   When you raise the rent, you run the risk of a moveout.  So, I would put her on a new lease at the same rent.  Put late fees in the new lease and enforce those rigorously.  Once you have her paying on time, then, and it may be a year from now, look at raising the rent.

Michele Fischer · Answer

The rental agreement being stale is not such an issue; it is effectively a month to month now. But what provisions are in it is important.  I'd schedule a maintenance inspection,  see what condition the place is in, and explain that it is under new management and things need to tighten up. See if you can brainstorm three different payment schedule options that you can stomach, get them to pick one, and explain that deviations will no longer slide. A dress any other issues you see in the walk through.  You could ask them what one thing they wish was different and see if providing that could lead to increased rent over time, but address the late payments first.

Bill S. · Answer

Account Closed with all due respect. You are fiddling while Rome is burning. Collecting information and signing a new lease from a tenant that only makes 2x rent is a waste of time. Give them notice to move out the end of July. Clean it up and raise rent to market.

They are behind, they have paid late, and they can't afford your place. It takes 3x income minimum to stably rent a place. It's nothing personal, it's just life. Sooner or later (probably sooner) something will come up and you'll have a tenant that can't pay (they won't have the money). They will drag you down with them. I can't stress enough the need to find new tenants if you want to continue to own the property.

My guess is if you knew or posted the whole story, there have been months in the past few years where the tenant has not paid rent. Probably 1 or 2 months a year your Mom was left to make the mortgage payment out of her reserves.

Account Closed · Answer

Ok new update, we will collect June's payment and then give notice in July to have them move out. She doesn't want to sell so we will get it ready to rent it out again.

Account Closed · Answer

@Bill S. I'm pretty sure there is a lot more to the story than my sister is willing to tell. I'm not sure why she wasn't being upfront about the situation the whole time. Now my mom and I are having to clean up. I completely agree with you that this situation will get worse, and what I want to do is get this tenant out and get a new one in, just need everyone else to get on board.

Account Closed · Answer

@Bill S. we are weighing all options, selling is high on the list.

@Rolanda Eldridge I was wondering if it was worth having her sign a new lease. I'll be collecting that information from her. Thank you!

Account Closed · Answer

@Joel Owens No monthly inspection, my sister just went over to the property whenever something needed to be fixed. When she initially signed the lease, she made 2X the rent. I'm not sure how much she makes now. Would I be able to ask her for more proof of income since I'm taking over?

@Lynn M. An emergency fund is at the top of my list, my sister didn't let us know when the tenant was late, and we didn't know how bad it had gotten until we got a letter from the bank.

Thank you all for the suggestions, very very helpful!!

Marcia Maynard · Answer

When a tenant has been breaching the terms of the rental agreement, I immediately do an inspection to see the condition of the property and to look for other lease violations.

If I want the tenant to move out, I approach it as:   "ABC is occurring (facts only).  This is not working for us.  If you can not pay the rent every month on time then you can't afford to live here.  I can give you a notice to vacate, or you can give me a notice to vacate.  It will be better for you and your record if you give me notice that you will be moving by XYZ date."

Then I offer my assistance to make the move-out go as smooth as possible for them.  I have never done cash for keys, but that is another approach.  Keep your communication kind, firm and fair.  What you don't want is for them to get mad at you and cause damages, and/or refuse to leave, not pay rent and force you into a costly and time consuming eviction process.

Diana K. · Answer

Honestly, ive had tenants that were perpetually late in the past. New management, new rules, new leases, etc -- nothing helped that situation. They probably either cannot afford it or just have no regard for rules.

I agree with some of the posters above, i would give them notice and have them move out.

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