Tenants son having many people at apartment constantly

[Rachel Lamory]

Hi, this is my first post here, thank you for any help you can give me, in advance! 

We have a duplex that we rent out.  There is a single bedroom unit on the first floor, and a three bedroom unit taking over the top two floors.  This is a very nice building in an area that is going through redevelopment.  The building was completely remodeled when we bought it 6 years ago. 

The big upstairs unit is rented to a woman who is very nice, and always pays her rent on time.  When she signed the lease, my husband specified that she and her son were the only ones allowed to live there. 

Recently, we've been hearing that she is staying elsewhere for long periods of time, and her son basically lives there alone (he is old enough at 18 or so) with many people constantly coming and going.  We've been told that they are up and loud until 3-4am. 

We talked to the mother about the noise issue, and she talked to her son, but he is acting out and slamming doors etc when he knows the first floor tenant is home.  Previously, we had to deal with the son smoking pot in the common area, but that seems to have stopped upon our request.  Pretty sure the group he is hanging with is not a bunch of upstanding citizens. 

The upstairs tenant that we are having issues with has her lease coming up soon, but she wants to renew.  We were happy to renew, until we heard about this new situation.

My husband was considering just raising the rent to accommodate all of these people, with the other option being to just refuse to renew. 

It's a little scary having both units open at once (first floor tenant is leaving this month, her lease is up). We also will have to replace the carpets (the sons room is COVERED in stains), and it's going to be pretty pricey. The upstairs unit is bigger than many SFH, so getting it ready will be a decent sum.

My other thought, was what if we put them on a month-to-month?  Then, if we hear anything about this continuing to be a problem, we can just not renew. 

Here is my list of pros and cons for each issue:

Raising rent:

Pros: more rent, will not replace carpets right now, won't be empty, less hassle
Cons: If this pattern continues, we will not be able to attract quality tenants downstairs, and the place will lose it's value overall.   Potential for damage to the house done by these kids.  

Not renewing:

Pros:  Headache over with, can probably raise rent a bit
Cons: Cost to get place rentable, having both units empty at once, dealing with potential fallout from angry son, potentially purposefully causing damage.

Month to Month:

Pros: Can potentially keep us from having both units empty, can choose to not renew as soon as it's clear the problem won't be solved, won't require an eviction if things go awry. 
Cons: concerns of property damage still apply. 

If we do choose to do month to month, should we be explicit in why we are taking this route?  The hope would be that the mother would take this seriously in this case?

What are your thoughts?  Thanks in advance!  

[James R.]

Rachel,

With my 10+ years of experience speaking as a self-managing investment property owner, here's what you do:  Do not, I repeat, do not renew her lease.  She and her son are gone!  You are NOT running a Dorothy Day house for her son and his misfit friends.  Her absence at the property is putting the safety of her son AND the tenant below in jeopardy!  You are looking at a lawsuit of some kind coming your way.  Get rid of them now, so that you can keep your good tenant below.  

Here's your letter:

Dear Tenant:

Thank you for your tenancy over the last X year(s).  I am writing to inform you that I have decided to not renew your lease.  Per the terms of your lease, I will begin showing the apartment in X days.  

Signed,

Rachel Lamory

Short and to the point resulting in zero legal grounds to sue you.  Get them gone now while you have the chance or, trust me, you will regret it. 

James