Inherited tenant not willing to sign a new lease

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Inherited tenant not willing to sign a new lease

Carol Kohn
Springtown, TX · Member since 2015 · 32 posts · 3 votes

I have an inherited tenant whose lease expired 2 weeks before I closed on property. The previous owners indicated that this is a great tenant who takes care of the property and always pays rent on time. The problem is, the tenant does not want to sign a new lease and wants to only do month to month (he works in the oil industry and is not sure how secure his job will be in the future). I have told him that I can offer a 6 month lease, or if he is willing to sign a 1 year lease, I will add a 60 day break lease option. I am worried that the tenant may move out and I would hate to lose a good tenant... especially since this is a duplex in a family oriented area where tenants only tend to move during the summer. Should I consider a month to month lease? Am I being too strict?

This is my very first investment property and I am also new to land lording so any advice on this is appreciated!

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Clay SmithBusiness Member
Investor · Louisville, KY · Member since 2013 · 419 posts · 244 votes
10y

Do a property assessment (move in inspection). Take photos now. Keep repairs up. Charge tenant for damage. This will make sure he has a deposit he deems worth saving. Gives you the leverage.

Wait until April when he has no more leverage. Give him 30 days notice to vacate or sign a new lease. Do not let him stay next winter. June & July is an easy time to rent again.

Consider writing a lease that allows the tenant to exit early if his job makes him move. IF he keeps it clean, let's you show it before the move, and says positive things to prospective tenants during showings; you will give a full refund without penalty with 30 days notice and end of month move out date. And a fast deposit refund on the day of the move.

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  • Colleen F.Pro Member
    Investor · Narragansett, RI · Member since 2013 · 8k+ posts · 4k+ votes
    10y

    I might say something different to you if it wasn't November but right now you could do month to month on a trial basis with 45 or 60 days notice to terminate on both sides. Let him know you decided to try it and you will re-evaluate in the spring.   In the spring if you decide you need to offer a lease and he doesn't want if you feel strongly about it  you can terminate the current arrangement.     People will move when they will move but I usually try to set myself up for a summer turnover if I can.

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  • Rick H.
    Lender · Greater LA/Orange County area, CA · Member since 2012 · 3k+ posts · 3k+ votes
    10y

    Odds are that tenant would break lease anyway if job is lost or relocated. So, you're on the hook.

    You can't change the economy but you can have a plan in place. 

    If he bails before spring, it will be harder to replace and vacancy will like cost you something, not to mention prep and marketing. 

    Now, as an investor, you get to make informed decision concerning risk and reward. If Your upside is pretty fixed, then the game may be defensive. If you force tenant to play their hand, they may play their cards, throw down and leave you with the uncertainty.

    2Reply
  • Clay SmithBusiness Member
    Investor · Louisville, KY · Member since 2013 · 419 posts · 244 votes
    10y

    Do a property assessment (move in inspection). Take photos now. Keep repairs up. Charge tenant for damage. This will make sure he has a deposit he deems worth saving. Gives you the leverage.

    Wait until April when he has no more leverage. Give him 30 days notice to vacate or sign a new lease. Do not let him stay next winter. June & July is an easy time to rent again.

    Consider writing a lease that allows the tenant to exit early if his job makes him move. IF he keeps it clean, let's you show it before the move, and says positive things to prospective tenants during showings; you will give a full refund without penalty with 30 days notice and end of month move out date. And a fast deposit refund on the day of the move.

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    4Reply
  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    10y

    After the expiration of a lease I let all my tenants stay on a month to month basis.  So I would let this person stay month to month. If you do not let them, them are going to move and you are going to have a vacancy.

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  • Clay SmithBusiness Member
    Investor · Louisville, KY · Member since 2013 · 419 posts · 244 votes
    10y

    Russell has a point. If he is truly a good tenant, just keep up on inspections and repairs. 

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  • Jesse Richardson
    Lender · Vacaville, CA · Member since 2015 · 58 posts · 21 votes
    10y

    inherited tenants are typically not preferred, but if he's in the oil industry is he ever there?

    Keep him on a month to month with a 30 day mo e out warning.  Keep your lease tight though.  

    1Reply
  • Kyle Hipp
    Investor · Appleton, WI · Member since 2012 · 1k+ posts · 464 votes
    10y

    when I have a property on a month to month lease I charge a little higher rent a month and there is a 45 day notice. If you already are considering a year lease with a 60 day notice, what is the difference of having a month to month with a 60 day notice. 

    1Reply
  • Carol Kohn
    OP
    Springtown, TX · Member since 2015 · 32 posts · 3 votes
    10y

    Thanks for the input everyone!

    I settled for doing month to month lease with a 60 day notice clause. Thanks @Kyle Hipp for suggesting the idea. The tenant quickly took me up on the offer, which amused me since it was basically the same thing.

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