New Duplex with troublesome tenant. Please Help!

[Jorge Hernandez]

Dear BP, please help!

I am a brand new investor, and just

closed on my first duplex today in Wisconsin, which has an existing upper tenant. The tenant had a verbal agreement with the previous landlord, of $500 per month for rent and a $200 security deposit WITHOUT utilities.

The current market value is between $800 and $850 without utilities.

I met with her and addressed her concerns maintenance wise, and assured her that those will be taken care of within a week by a general contractor.

I told her that I would work with her and bump her up to $750 per month, which INCLUDES water.

This still puts her at $100-$150 under market rent.

I sent her a recap email with what we talked about , and she said she won’t be renewing her lease, and will be moving out by 05/31, but she will pay at the $500 rate. She specifically stated “ i do not accept the new rate”.

What do I do now ?

My next steps to follow are

1. Send certified letter and email saying that she has 24 hours to sign a new “month to month” lease agreement, which will be at the new rate of $750, which will be charged until the day she vacates

2. If she doesn’t agree to sign the “Month to month” lease at the new rate, then send her a notice to vacate the premises by end of April (she had paid rent until then) , otherwise I will start the eviction process by May 1st

What do you all think of this process ?

Is there anything you’d do different?

I appreciate some constructive criticism

Thank you.

[Patricia Steiner]

You hit the lottery!  Congrats on your acquisition and even more so on this departing tenant...now you can move on with renting it for fair market rent, with a lease in place, and to a tenant of your choosing.  In your state, here's the law regarding terminating a month-to-month:

"For a month-to-month lease, the landlord and tenant must provide 28 days' notice of their desire to terminate the lease. If the landlord wants to terminate the lease for breach or non-payment of rent, he or she is required to provide 14 days' notice."

I recommend:

1. Reply to her email thanking her for her response and advising that you will accept her lease termination effective May 31st.  You will also accept the rent at $500 for May.  

2.  Schedule a final walk-though with her for a time on May 31st for the purpose of viewing the property vacant and broom swept so that the return of her security deposit can be determined.

3.  Advise that you will begin marketing the property immediately.  Check your state law but it doesn't appear that you have the right to show the property unless the tenant agrees to it - unless it is in the lease.

4.  Be sure to wish her well as she moves forward - and don't indicate any hesitancy in the fact that in your mind "she's already gone."  

Always remember that you're not an "investor" or a "landlord..."  You're bigger than that - you're running a business.  Run your business as one and you'll maximize your return while minimizing all the manufactured chaos that tenants can bring.  

Again, congrats!