Tenant doesn’t want to pay full rent - need advice

Tenant doesn’t want to pay full rent - need advice

Ann Arbor, MI · Member since 2019 · 11 posts · 12 votes

Advice needed! I purchased a small office building in Oct 2019 with two tenants. One tenant is a small pharmacy who signed a 5-year NNN lease starting March 2019. According to the lease, the tenant pays a base rent plus estimated CAM charge each month. At the end of each year, the landlord provides a summary of actual CAM charges and invoices the tenant for any outstanding balance. The monthly CAM payment can also be adjusted at the landlord's discretion. In addition, the lease says that the base rent increases by $100 every 12 months. This is all very clearly written in the lease.

In December I sent a letter telling the tenant that the monthly CAM payment will be increasing from $620 to $780 per month as the 2020 budget shows a substantial shortfall.  The tenant did not respond to the emails so I tried repeatedly to call and finally only got ahold of her by calling from a different number.  She was very upset at me for “raising the rent” and said that her business is not doing well and she can’t pay the additional amount.  She acted shocked about the base rent increase and the additional CAM charges.  She said she will only pay the amount she was paying previously and no more. 

Any advice what to do?  Should I try to negotiate with her, or lay down the law and tell her to pay or get out?  

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Member since 2019 · 295 posts · 159 votes
6y

@Carl A. You get rid of said tenant... don’t let the tenant start telling you what they will pay that’s a recipe for disaster but that is a considerable jump in rent tbh. Most people that rent are already on the edge at least in my rentals they are doing everything they can just to hold onto the place they live in so unless I see something coming I don’t really increase it. Now if they make me mad I increase it and they suffer be nice to me and I’m decent to you.

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  • Member since 2019 · 295 posts · 159 votes
    6y

    @Carl A. You get rid of said tenant... don’t let the tenant start telling you what they will pay that’s a recipe for disaster but that is a considerable jump in rent tbh. Most people that rent are already on the edge at least in my rentals they are doing everything they can just to hold onto the place they live in so unless I see something coming I don’t really increase it. Now if they make me mad I increase it and they suffer be nice to me and I’m decent to you.

  • Ahmer ZaidiPro Member
    Rental Property Investor · Orland Park, IL · Member since 2019 · 29 posts · 16 votes
    6y

    I'm no expert and don't have any experience with non-residential commercial properties but seeing that the lease is still fresh you'll need to determine the path of least-loss.  On one hand, the terms of the lease are legally-binding and can be enforced with a cost plus the cost of potential rent loss during that time and vacancy after the fact.  At this juncture, having a strong word letter by your attorney is a good place to start. On the other hand, work with the existing tenant to come up with new lease terms where both parties are satisfied.

  • Theresa HarrisPro Member
    Member since 2019 · 15k+ posts · 11k+ votes
    6y

    Remind her that she signed the lease and see what she says.  The higher costs are out of your control as it is the tenants that are using the common area and utilities.  Greta has a good point-you can always modify the $100/month rent increase.

  • Investor · Columbus, GA · Member since 2014 · 2k+ posts · 1k+ votes
    6y

    Evict them and use a more simple lease with the next tenant. That lease sounds like a legal spider web.

  • Investor · Columbus, GA · Member since 2014 · 2k+ posts · 1k+ votes
    6y

    Evict them and use a more simple lease with the next tenant. That lease sounds like a legal spider web.

  • Rental Property Investor · TN · Member since 2018 · 2k+ posts · 2k+ votes
    6y

    I'd give her a breakdown of the monthly costs for the common areas.  Ask her if she sees areas in that cost that can be reduced.  Maybe the tenants do not want night lighting, or as much.  Maybe planters of greenery can go?  Maybe get more bids on landscaping or snow removal or where ever the costs are coming from  It does seem like a huge increase in something that should not go up that much in 9 months.

  • Rental Property Investor · Erie, PA · Member since 2018 · 6k+ posts · 9k+ votes
    6y

    Find a new tenant .. this one is an idiot that can’t read or honor her obligations. Not rocket surgery 

  • Member since 2019 · 117 posts · 45 votes
    6y

    This is business 101.  What option is best for you

    1. Evict tenant- can I get a new better higher paying tenant?

    2. If she pays on time, takes care of property, and it is not easy to replace the tenant then suck it up. 

    3. The best is negotiate- settle for a number in between, be reasonable, replacing tenants is expensive

  • Lake Charles, LA · Member since 2016 · 99 posts · 54 votes
    6y

    @Dennis M.

    Rocket surgery...

    🤣😂🤣😂

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