How long would you be willing to hold a place for the right tenant?

Question

I am renting out my home for only the third time.  My last tenant went into arrears and didn't pay their last 3 months of rent.  I want to get the home ready for rental May 1st, but there is still a lot of work to be done before it is ready.

I have a young (in their 30's w/ no children) professional couple who want to rent place.  They were, on a personal level, the best ones I interviewed.  I have done a check on them both and they both have excellent credit history and rental payment history.  The problem is that they can not take the place until mid June (pro rated).  They are willing to sign the lease and give me the security deposit now.

Is is worth it to hold the place for them?  I still have repairs to make but it will not take a month and a half to make then.  Should I pass and keep interviewing?  What is your experience?  The home is in an ok neighborhood and most of the people I have interviewed were either college students or low income with not so great credit.

Account Closed · Answer

I have done this before for a good tenant.  I always ask though that the deposit be paid in full in order to hold it.  If they are serious and they are good tenants this is not a problem.

Eric Wang · Answer

It depends on the rental market in your area.  Is there a lot of vacancy in your area?  With high vacancy and unemployment, it might take a while to find a tenant.  Lets say you have rental ready to rented by May 1st, you might find someone right away and you might not.  Most likely your prospective tenants will have to give 30 days notice to their landlord.  Month and a half is not long to wait.  No more advertising and showings.  You have tenant on contract with full deposit.  If they back out, you keep the deposit.  By having a contract, they can give their 30 day notice.  You can relax and move on to your next adventure.

Jon Holdman · Answer

Being out three months rent on the previous tenant sounds like a self-inflicted wound.  Rents due on the first, late on the fifth.  The Pay or Quit notice goes up on the fifth and eviction starts on the eighth.  Unless you're in a tenant friendly location (and why bother with rental property in such a location), you should be able to get a deadbeat out quicker than three months.  Don't make that mistake again.

I have held a place for a tenant, but only a couple of weeks.  Those repairs don't sound like that much work, so being rent-ready by 5/1 seems feasible.  Missing six weeks rent is a lot.  When someone is looking that far out, I tell them to call me a couple of weeks before they're ready to move, and if its still available, the can take it.

When I did hold a place for a couple of weeks, I required the full deposit when they made the hold.  I had a specific agreement for that deposit.  It said the payment was non-refundable.   If a lease was signed on the agreed upon date, the money became the security deposit.  If not, I kept the money.  We continued to show the place until the lease was signed.

In your case, I'd be tempted to say to call you on June 1.  If its still available, they can hold it on that date with a move in date on June 15.  Again, you want one full months rent on June 15 plus the deposit.  Then, collect half a month's rent on July 1.  Tell them you intend to continue to show the house, and will lease it if you get a qualified tenant who's willing to move in sooner.  You could offer them the right of first refusal. That is, if you find a qualified tenant, you call them.  They would have to move in within two weeks or else you lease it to your new applicant.

Mitch Kronowit · Answer

A few questions:

How realistic is your May 1st target seeing how you have over a month in repairs? Did you plan on renting it out BEFORE it was ready and simply perform the repairs while another tenant was in there? How are you getting applicants already? Are you advertising and showing the place before it's ready? I doubt you'll get the best rent and tenants with that approach.

Otherwise, to more directly answer your question, I once held a rental for 2 weeks for a couple of great (returning) tenants. It sounds like you won't have the place ready until the beginning of June anyways, so you would be holding your place for about 2 weeks as well.

Collecting a deposit up front is definitely mandatory before holding anything for anyone. I would also see if they can pay the first month's rent now - not 2 weeks, a full month (the second month you prorate). Then I might consider holding the place for them.

Account Closed · Answer

It depends upon how thin the good tenants are on the ground.
          
          Did you actually run a thorough screening on this couple, or do you just "like them".
          
          2 weeks would have been my limit before this market, but I'll hold for a month, now, if I get a well qualified renter. Applicants are so bad, it could easily take me a month or more to fill a vacancy, since I still insist on rejecting people with drug convictions, no income, and involvement in current evictions.
          
          I won't hold without a non-refundable holding fee. The holding fee converts into the security deposit when agreement is signed and all fees paid.
          
          PUT A DROP DEAD DATE IN YOUR AGREEMENT TO HOLD.
          
          Otherwise you will hold for a month and a half only to be informed that they won't move for 3 more days, until next week, and then the week after that.

Mike C · Answer

I donâ€™t think you can do much better than following Jonâ€™s excellent post. But certainly keep in mind the time it may take to get windows and the other things done as suggested by Jeff.

You should have learned a lot about some things you can improve by the advice already given to you in this thread. Do yourself a favor and learn from it.

I personally would not hold a rental that long without lots of non-refundable cash (with maybe the first right of refusal Jon suggested if they are willing to start paying then. Great tip). While they being good people as you stated is nice, it is irrelevant as a business decision. Your job as a landlord is to get the best quality tenant you can in there as soon as you can. Donâ€™t let your personal feelings about a tenant or potential tenant cloud your business judgment.

Learn from this experience and move on. Also consider if you had done a better job with the eviction process, there is a good chance it would already be rented and these people wanting July would be a moot point.

Best of luck

Mike C

Mitch Kronowit · Answer

Just in case you, or anybody else, are considering renting to college students, here's a good tip I got from an experienced landlord. First, try to rent to college girls before college boys. Face it, girls are typically cleaner, especially when it comes to the bathroom.

If you must rent to a bunch of rowdy, slovenly college boys, bite the bullet and hire a cleaning person/crew to come in once a week or so to keep the filth down. The place will still be littered with beer cans and old pizza boxes, but at least you'll keep the funk in the kitchen, bath, and floors from building up into a caked-on coating of God-knows-what.

M F. · Answer

Yes, I know there are things I could have done better here, but that is for another thread.

As far as this couple is concerned-  yes, I like them- but they also check out.  Great rental history, great credit, and both have been at their respective jobs for 3-6 years.  I haven't gotten back to them yet as I am weighing all my options.  How often do tenants like that come around?

If I go through with this I would make June 15th the start of their lease.  I would absolutely make the security deposit non refundable if they back out.

There are a lot of rentals in the market here because it is a college town- so there are also a lot of people looking- but I don't know that I want college students living here.

Jeff B. · Answer

If you make the tenant wait more than 3 days then more than likely they are already shopping elsewhere thinking you aren't going to lease to them so don't wait very long to communicate with them.

Jeff B. · Answer

You are trying to minimize your losses and increase your gains.  If you inspect your property once a year you know how long before all the Windows need replaced.  Windows can have a two week lead time and 1 week until uninstaller can get to your job and take two days to remove old and install new windows.  As you can see this needs to be taken into account 1 month before you need to rent the place.

Painting the whole interior can take up to 1 week depending if they are using airless, the size of the crew, and will take longer if it's exterior with bad weather.  The contractor usually needs a weeks notice before they can start on your.

The fence can be repaired or replaced in under a week and again they would need at least 1 weeks notice before they can start.

The point I am trying to get across is that the additional holding period could have been minimized and shouldn't be an issue now.  It's just the cost of getting additional Real Estate education and I'll bet won't happen in the future.

How long would you be willing to hold a place for the right tenant?

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