Refusing to Rent to Someone

[Tasha C]

14 months ago I had 2 twenty-something males move into a 2 bedroom unit. 1 had a good job and was financially more secure than the other.

But the 2nd guy was working multiple jobs, communicative and responsible, despite sometimes being late on his half of the rent or requesting to use security deposit towards rent. I still liked him and was happy to work with him.

Then about 6 months into the lease, the 2nd guys mom moves in with them. I never said anything about adding a 3rd person because that was their situation to work out and I figured it was not ideal for anyone in that group, there must be some desperate times at hand.

Well guy #1 moved out at 12 months, leaving guy #2 and his mom living there.

Guy #2 said he is moving out in 60 days, this was his notice. Fine with me, I'll be prepared to find a new tenant.

Then, last week, guy #2 says his mom wants to keep living there and take over the lease. "She'll find a roomate or something."

I initially thought it was ok, but have kind of a "feeling of doom" about leasing to the mom. I get the feeling she cannot afford the place. I get the feeling she cannot afford very much in the area and this is kind of an only option for her. Her son said he will leave the security deposit for her to use.

On the plus side, my husband went in there once a few weeks ago and said the place is very clean.

But my husband and I have tentatively agreed we would rather not lease to the mom and save ourselves the potential hassle of trying to collect rent every month.

I have to be the one to break the news to them. I know she was never on the lease, so I dont owe anything to her legally...but on a human level, I feel horrible.

This started out as a question asking advice for how to best phrase this conversation...but there is no good way to tell someone that they need to find a new place to live.

[Mike McKinzie]

Jon is correct, this may not be a business for you.

If there is one word I would like to see ELIMINATED from Real Estate Investing, it is "FEELING." "Feelings" have gotten in the way of a person making a wise decision more than anything else. Look at it this way, if you owned a Retail Store and a person tried to check out with a full cart but had no money, would you let them check out and leave with the goods? Of course not.

Another problem with "feelings", as Karen M. pointed out, is that many times they are based on ASSUMPTIONS. And, as we all know, assumptions are incorrect many, many times.

So let's remove all "FEELINGS" and all "ASSUMPTIONS" and deal with the facts. Even though you did not rent to the mom, when you found out she was living there, you did nothing to evict her, so most states would consider her a "legal tenant." You gave "tacit" permission for her to live there. So the best thing to do would be to have her sign a rental agreement with a set amount of rent due on a set day each month. If she pays the full amount, you are good to go. If she does not pay, evict her. But keep FEELINGS out of it. If the tenants are currently behind on their rent, give an eviction notice to ALL of them, including the mother.

If you are uncomfortable doing an eviction, then this is definetly not the business for you. It has been said many times on BP, TENANTS ARE NOT YOUR FRIENDS. They are your customers. And if customers don't pay, they don't get to stay.

To relate a current short story, the tenants in one of my Colorado Rentals just gave notice because they are getting a divorce. My property manager said that "we need to do what we can to save their marriage," to which I responded, "NO, we need to get new tenants." So he got some new tenants.

This business is a tough business, and the investor makes it a lot more tough if he/she let's their feelings get in the way of making wise decisions.