Tenant wants to move in friend and her children

Tenant wants to move in friend and her children

Chicago, IL · Member since 2018 · 2 posts · 0 votes

Hello BiggerPockets!

I'm fairly new to the BP community and very new to real estate investing. I purchased a duplex in December of '18 and moved in my first tenant this past February. I've learned a lot throughout the whole process of searching, purchasing, and renting, and plan to continue the growth of knowledge and experience. That said...

My tenant, a single mother of three energetic little ones, is asking to move in her friend, a soon-to-be single mother of two. She claims the stay will be temporary, but I know that "temporary" is relative. The Unit is 1350 sq. ft., has 3 bedrooms and 1 bathroom, and has shared laundry. I'm aware of the local code (Chicago) regarding occupancy limits, and am not concerned about exceeding that limit with seven people living in the Unit. I'm considering accepting the new tenant, but want to make sure all my bases are covered. 

My suggested amendments to the current Lease are as follows:

1.  Increase rent $100 per month for utilities surcharge.

2.  Charge a non-refundable move-in fee for the new tenant if she plans on moving in large furniture.

3.  The current Lease allows for pets under 35 lbs, however, the current tenant does not own a pet. For the amendment, I plan to not allow any pets. I think five little kids will be enough.

4.  Add a provision requiring that should one tenant move out, the other will have to pay the full rental amount.

Of course, I plan on running a full background and credit check on the new tenant, as well as make sure she has enough income to cover the rent in full should my current tenant decide to move out. Is there anything I'm missing? Should I not consider accepting the new tenant?

Thanks for your comments in advance!

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Rental Property Investor · Edmond, OK · Member since 2017 · 1k+ posts · 1k+ votes
7y

It's kind of red-flaggy to me that a tenant that's been there for a month is already asking to move other people in with her. It may be a legitimate being nice thing, but it makes me wonder if her friend has some reason she wouldn't have qualified as a co-applicant.

If you want to go for it, and your local laws allow it, then I would try to sign a new lease or lease addendum. I would definitely let current tenant know that her friend will have to apply and qualify like any other tenant. Definitely get them both on the lease as fully responsible for rent amount and damages. I would also try to find a way to do an additional deposit for the "temporary living" situation. 7 people in a 3/1 will cause a lot of wear and tear whether it's intentional or not. 

Also, don't forget to consider the quality of life of the other tenants in your duplex. 

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  • Member since 2016 · 13k+ posts · 12k+ votes
    7y

    It's your decision but I would guess that when you screen you will find that the new tenants income is not sufficient to carry the rent on her own and you will have to reject.

    I would never want 5 kids in a unit but again that is your decision.

  • Rental Property Investor · Edmond, OK · Member since 2017 · 1k+ posts · 1k+ votes
    7y

    It's kind of red-flaggy to me that a tenant that's been there for a month is already asking to move other people in with her. It may be a legitimate being nice thing, but it makes me wonder if her friend has some reason she wouldn't have qualified as a co-applicant.

    If you want to go for it, and your local laws allow it, then I would try to sign a new lease or lease addendum. I would definitely let current tenant know that her friend will have to apply and qualify like any other tenant. Definitely get them both on the lease as fully responsible for rent amount and damages. I would also try to find a way to do an additional deposit for the "temporary living" situation. 7 people in a 3/1 will cause a lot of wear and tear whether it's intentional or not. 

    Also, don't forget to consider the quality of life of the other tenants in your duplex. 

  • Investor · Jasper GA · Member since 2015 · 1k+ posts · 1k+ votes
    7y

    Nope.  You will end up having problems and loosing money in the process.  There will be drama and excessive wear and tear on your property.  Say NO quickly and enforce your lease.  Nothing wrong with being a kind landlord but being a charitable landlord is expensive.    

  • Chicago, IL · Member since 2018 · 2 posts · 0 votes
    7y

    For the purposes of maintaining longevity of the Unit as well as considering the quality of life of the other tenant (a.k.a. me), it definitely makes sense to not go through with adding the new tenant. I was hoping that the additional monthly income would balance out the costs, but it seems like the cons outweigh the pros for this one.

    Thanks everyone for the replies!

  • Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes
    7y

    @Sean Heard I don’t see why you would agree to that unless they are willing to pay double the rent, in addition to the extra utilities. Even then it might not be worth it, your place is likely to get trashed.

  • Nathan GesnerBusiness Member
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    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    7y

    This has "WARNING" written all over it.

    Your tenant is new and she's already wanting to move in a roommate. She claims it's temporary but most of us have had this happen in our lives where someone needs a place for a short time and then they end up trying to stay forever. 

    Adding two babies won't run the risk of wear-and-tear but you will have an extra adult running extra laundry, more baths, and who knows what else.

    I would require the additional adult to pass my screening. She would have to have income equal to at least 2x the rent so that I know she's not a complete freeloader. Then I would charge a $50 - $100 fee for adding her to the lease. If she's only going to be there for a few months, write an addendum that requires her to move out on a definitive date instead of leaving it wide open.

    Again, I wouldn't allow it but you can at least mitigate your risk if you decide to move forward.

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  • Rental Property Investor · Cleveland, MN · Member since 2017 · 518 posts · 354 votes
    7y

    I would say no. If she can pass all of your tests then she can get her own place. How are your other tenants going to deal with all of those people? You might lose them in the process.
    If you do decide to go with it, be sure to have a lot of rules, including when they can use the shared laundry. That may become another issue with the neighbors.

  • Real Estate Agent · Virginia Beach, VA · Member since 2012 · 2k+ posts · 1k+ votes
    7y

    I would ask about Fair Housing Laws before you change the terms of the lease as if the occupancy limits for that many total are legal in the unit, it's my understanding that you cannot charge more rent or fees for more children.     

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