Investor · Woodstown, NJ · Member since 2014 · 123 posts · 43 votes
Hello I have a rental in a C to C- area in town and I am finding that the tenants are consistently late on rent. I think at the end of the day they just don't make enough money with rent making up about 40% of their monthly budget. I have had some great conversations with these folks and have talked about making weekly payments in addition to trying to incetivise them by lowering the rent with 6 months of on time payments. They have about 6 months left on their lease and I dont want to lose them but at the same time I want to lose the hassle factor of communicating with them weekly about rent. Having said all that I would like to discuss the tentants signing a 2 year lease at a $50 monthly discounted rental rate. It doesnt sound like a lot but it will be a savings of $600 per year. Any thoughts on this idea? My thoughts are I will lose much more with a month of vacancy.
Property Manager · Livonia, MI · Member since 2011 · 4k+ posts · 1k+ votes
12y
a few thoughts...
they are having trouble paying rent on time and you are wondering if you should get them to sign a 2 yr lease? why? id lower the rent (if you can) and make them month to month. they will not be tied and you can always kick them out in 30 days or less if they are behind. they aren't going anywhere since they dont have enough for a "move in" deposit.
have them pay weekly, lower the rent a little bit if you want them to stay. vacancies are terrible, but sometimes necessary. they will be happier and it might be a win-win.
Investor · Woodstown, NJ · Member since 2014 · 123 posts · 43 votes
12y
@George P. I like the idea of a month to month lease leaving me with some flexibility, I hadn't thought of that. These are definitely good folks who just have trouble managing their money.
@James Wise I think they would be happy to sign the 2 yr lease, I guess I need to research the lesser of two evils, evicting someone while in lease or evicting a month to month tenant should it come to that point.
I think I will try lowering the rent $45 and see where that takes us. In the meant time I'll let the lease run out and go into the automatic month to month after expiration.
Real Estate Agent · Virginia Beach, VA · Member since 2012 · 2k+ posts · 1k+ votes
12y
If you are lowering their rent $45, I'd make it contingent on no late payments; otherwise, it goes back to the normal rate plus late fees. If you just lower the rent, you'll likely still have the same hassles you have now, just making a lot less per year for the trouble. I'm not sure I'd do that just to try and avoid a vacancy, but I don't know how hard it is to fill the unit.
Investor · Los Osos, CA · Member since 2013 · 78 posts · 25 votes
12y
I have a duplex in what sounds like a similar area with similar challenges. I don't even offer a one year lease for the reasons mentioned above. I don't want to be married to a problem tenant and it is easier to end the arrangement by terminating a month-to-month rather than prove a violation of the lease. I offer my month-to-monthers the "gold star" incentive of future discounts on rent for periods of one, two, or three years of timely payments without lease violations...
Real Estate Investor · Somerset, KY · Member since 2011 · 211 posts · 64 votes
12y
@Jon Lafferty If your offering fair market rent and they are that much of an issue I would stick to my guns and find another tenant that can pay on time. If they have been there for several years, take great care of your place, never been late much and fell on hard times then it would be a thought to consider I suppose. From my 10+ yrs experience if you give them an inch they will take a mile!! If your calling every week now its a big red flag to me !!! If they get a discount now they will want more of one later somehow!!! Maybe they need to change jobs or do extra work somewhere, not your resposibility? Keeping a roof over your head should be #1 priority for them just as it is for you and the bank dont lower my payments so why should I lower rents? In a very special situation I could see lowering it $50 a month for a little while and then returning to the normal rate but even then if other tenants know you will do it they will want that treatment too. If your going to do that I would set ground rules for yourself and them and stick to my guns. Example- lived in the property 2+yrs, proof of job loss, only reduce rent for 6mo.
After having issues for several years trying to be nice and believe all the hard luck stories (which some might be true) I finally just said Ok here is how it is!!!!!!!!!! Rent is due on the 1st and no later than the 5th (4 day grace by law I must offer here) if you don't have the full amount of rent by the 10th including late fees you receive an eviction and its the same for everybody. This give the people that get a 2 week paycheck time to pay their rent if they have fell behind on the last check and came up short for the rent. I also use a 5 page 1 year lease b/c I feel its in my best interest in court for the protection of my property instead of a month to month.
The way I see it the faster I get the problem tenant out the faster I can find a good long term tenant that will pay and I wont have to call and beg for my rent. Been there too many times my friend.
Investor/Landlord · Farmington Hills, MI · Member since 2011 · 1k+ posts · 1k+ votes
12y
I would evict and get a new tenant but if you want to give them a break do NOT lower the rent. Instead, give them a discount if the rent is paid on time. If the rent is late they owe the amount stated in the lease, plus late fees. That gives the tenant a big incentive to make sure the rent is paid on time.
Real Estate Investor · Somerset, KY · Member since 2011 · 211 posts · 64 votes
12y
Good idea also @Jeff Rabinowitz . Lowering the rent would be lowering your standards to meet their needs. Your the boss, they play by your rules not the other way around!!