Renter pays for year up front!

[Joshua Todd]

All,

I've been attempting to work this issue out but cannot seem to find the best solution.  

Renter's lease expires in August, good time of year in Northern NY for lease to expire as winter is a bad time to move.  The inherited tenant however, pays for the entire year in advance with the proceeds of their tax return around February.  I'm debating doing a month-to-month lease to have the lease and the payments coincide, but when this tenant moves out, I'll be listing the property in the middle of winter!  I do like the full year up front and the great tenants that are there now, just unsure how to tackle the logistics?

Any suggestions on how to adjust lease terms, payments etc?

Thank you in advance.

Josh

[Kim Meredith Hampton]

@Joshua Todd please read a blog I wrote about collecting the whole year of rent upfront:

I know it may sound appetizing and those dollar signs can look oh so great, but there are many downsides to collecting all the rent upfront. You also will need to check with your state and or municipality, it could be against the law to collect money beyond the current rental period.

Some of the issues that I have ran into in the past are that the tenant needed to break the lease, we re-rented the property, but the owner wanted to keep all of the rent in escrow. We had no vacancy, no repairs, and the tenant paid our lease fee. There was no out of pocket or loss to the owner, so litigation ensued, eventually (one year later) the owner lost and had to refund the money we had in escrow. Thank god we had the funds in escrow and refused to send them anywhere until litigation ended, or I think the tenants would have been out the money, long spent by the owner.

Some other issues to consider that could and have happened to owners, is that the property could be damaged by a hurricane, flood etc... and they have spent all of the money, which essentially needed to be refunded to the tenant.

The tenant could file bankruptcy, and the owner could be dragged into this because of the upfront rent the tenant paid.

What if the owners get divorced, what happens to the money that was already paid? What if the tenant is in violation of the lease and you need to evict, you may have a real issue when it comes time to evict.

Keep it clean and don’t let that carrot/hook cloud your vision when it comes to collecting all the rent up front.