Great tenant wants to get out of lease a few months early...

[Jeffrey Gignac]

My first tenant to my first and only rental property is looking to move out and get out of his lease early for reasons having to do with the custody of his children and school districts. He has been a fantastic tenant who always pays on time and has made many upgrades to the home at his own expense. He has never asked for special consideration and it has been a fantastic working relationship. 

He would like to be out by the end of June (45 days notice) and his lease runs throught September. I know that finding a renter will be easy and I should not miss more than 1 month's rent by letting him out early. How should I handle the sitation? I have a $900 security deposit that I am holding that can always be credited towards the 1 month of lost rent ($900/ month). 

One positive to note, I have been renting at a severely undermarket rent. Smaller houses on the same street on renting for almost $1400/ month. This could be a good opportunity to bump up rent when they leave. Any suggestions are welcomed!

[Nicole A.]

He's been great, so I'd let him out early without penalty. But he does need to pay rent for the remaining time he is physically in the property. Do not let the deposit go towards rent. Also, do not give him his deposit back early. Once he officially moves out and gives you the keys, then you assess for any damages. Also, you should write up a simple document notating that you are agreeing to release him for the lease, you both sign and keep your own copies.

How undermarket are you currently? $900 rent compared to $1400 market? Definitely increase rent, but don't go too crazy upgrading either.