Tenant asking about rental increase.

[Karyn T.]

Almost 2 years ago, we rented out our personal SFH. The tenants are professionals, who had hit upon hard times during the recession and their credit had taken a severe hit. They also had 3 large dogs (we have 2). Because I am in a sister-profession I understand, intimately, that even REALLY responsible people can have a run of bad luck like they did. I was actually transitioning jobs as well, at the time, so it seemed like a win-win for all involved. We put the rent at a level that they could afford, but one that was a bit below our actual costs of ownership and upkeep (ie: we subsidized their rent in exchange for peace of mind and ease of transition on our end). Well, other than about $20K in plumbing issues the very first month of rental, all has been good, quiet, and rent paid on time. They asked for "first right of refusal" if we were to offer the house for sale, which we were fine with, knowing that 1) they are still years from qualifying and 2) we are unlikely to sell.

Late last year, I contacted them to see what their idea on continuing the lease vs buying was, and I got a fairly terse response back that it was "too early to decide".  Fair enough, but I let her know that we would definitely have to increase the rent substantially at the next renewal, if we allowed them to stay.

Meanwhile, I've been taking (locum) jobs all over the country to buy time until the lease is up (my jobs provide housing), I can terminate, and move back in.  Today, she emails me (just short of the 3 month end-of-lease window) to ask what the rental increase would / will be.

My questions are:
Should I respond, informally, at all (ie: by email)?
Since my preference is to simply end the lease (so I can have my house back), and Washington state apparently lets you send a lease termination letter up to 3 months in advance (from what I understand??), should I simply send the lease termination letter and call it a day?
Should I offer a month-to-month at the increased rate (the increase would be about $800/month more)
Is their "right of first refusal" terminated with the lease or with an offer to purchase, knowing they can't qualify?

PS -  the tenant apparently has previous professional real-estate knowledge so I want to keep everything on the up and up, and not leave her any loopholes to exploit.

[Mike Hanneman]

@Karyn T. you need to figure out what you are going to do first. Are you going to move back in or are you going to have a rental? Once you figure this out then you can proceed to either give her the new rent amount which should/better be at market, or tell her you are not renewing lease.

You say "if they are willing to pay..." this should not be an option. They will pay market or you will easily find a tenant that will. Don't let that scare you from raising the rent. It is unacceptable for you to be lossing money and paying rent for these tenants.

You need to take back control of the situation as you are the one that has, or at least should have the control. You provide the housing and the lease is coming due...you have all the control.