Tenant might renew, I might get a PM. How long to wait?

Question

So I have a rental property that i have rented to a family for the last two years for $1650/month. Great family, keep the place super clean. Their contract ends in feb 2019. The rent was increased in st augustine to nearly 1900/month. So I told them that I would be increasing their rent if they renew to either $1800 if they renew for 1 year, or $1750 if they renew for two. The contract says that we need to have a new contract in place 60 days prior to the end of yhe lease. If they don’t renew, I can get a property manager and end up getting what I am asking for ranyways. If they do renew great. So if they renew I will not need a property manager since they are such good tenants that it allows me to manage without one. However if they don’t renew I will go ahead and get one. My question is, their is 90 days until the end of the lease. How should i remind them about what they want to do again? We had the conversation on November 1st. Also, if they don’t renew, and they choose to move out, how long should I give a PM to place a tenant before trying a different one? Thank you

Nathan Gesner · Answer

@Allan Calderon I don't like a two-year lease because they are almost certain to break it. And you're offering a discount for the two year with no penalty if they break it after one year, so why would they choose a one-year lease at a higher rate? I wouldn't give them so many options, I wouldn't try to justify my decision, and I wouldn't add so many personal comments. It almost sounds like you are asking their permission. I would cut it down to one year at a slight discount, maybe 10-15% below market, or they can choose to move out. I'm sure they can shop around and see you're giving them a good deal. I also recommend you ignore their claims of buying a house. Tenants will often say things that aren't true or that will never occur. They often do this to try and scare you into making concessions like lower rent so they don't leave. Think if it this way: if they leave and you bump rent $200 a month, that's an extra $2,400 in your pocket. Or you can placate them and essentially gift them $2,400. If you like giving away thousands of dollars, I can send you my mailing address! 😂

Allen Lopez · Answer

@Nathan G. You are so right. I like your thinking. Thanks again!!!

Allen Lopez · Answer

@Nathan G. What are your thoughts on this as a text? Mark maria, This hope you guys had a great thanksgiving. This is just a friendly 90 day reminder of your upcoming renewal due date. As previously mentioned, we should have an agreement of renewal by the end of December. As I mentioned, I know that you guys are looking for a house to purchase, so I would like to be flexible on the lease terms. There are three options that I think would be fair to both. 1) two year lease at $1750/month with the option to break the lease without penalty after 1 year with at least a 90 day moving notice. 2) one year lease at $1800/month with the option to break the lease with a 90day moving notice. 3)If you chose not to renew before the renewal date (60 days before the end of the lease), we will do a month to month lease for $1900/month. I love having you guys as my tenants since you guys are so understanding and take care of the house like it was your own. As I mentioned, the reason who I am increasing prices is because of the average current rate in the area is about $2000/month. It would be unfair for me to increase the rent to that extreme. I also know that moving is a huge hustle and changing mail and kids it can be both chaotic and scary. So if there’s anything I can do to help with the decision please let me know. Again, no rush. Think about it and just let me know what you guys think or if you have any questions.

Allen Lopez · Answer

@Nathan G. Thank you

Nathan Gesner · Answer

@Allan Calderon I think any written format is fine as long as you get an acknowledgement. My goal is to make communication as simple as possible.

Allen Lopez · Answer

So I typically communicate with them via text message. Would you guys do it via text message or call them or send them the notica via mail? Thanks

Nathan Gesner · Answer

Send them a written notice with two options:1. Respond before the 60-day deadline and your lease will renew for one year at $1,800 a month.2. If they miss the deadline, the rent will automatically increase to $1,900 a month and they will be leasing it through the property management company.By the way, I don't recommend giving anyone a two-year option unless you have a good termination penalty. In my experience, the majority of tenants will cancel within that two-year period.

Steve Rozenberg · Answer

I would suggest sending them a friendly 90 renewal notice, let them know all the benefits of staying in your place and not having to move, pay costs for new deposit , getting utilities turned off and then turned on, days off work, moving van , mail etc.. Let them know how much you value them as a client... maybe offer a free ceiling fan or paint a wall or free landscaping one time visit.. if they renew. Give them all the reasons to stay not to leave. Also I would include the renewal notice.. I would not ask them if they are going to renew, I would take the assumptive route and assume they are renewing along with all the valuable reasons why it makes sense for them to stay