Author Topic: Choosing Between Two Good Tenants  (Read 4662 times)

Rainman480

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Choosing Between Two Good Tenants
« on: June 09, 2014, 10:33:58 PM »
I'm looking for some advice from my fellow landlords here, or anyone with a different way of thinking through this.

I have a duplex near the hospitals and universities of Cleveland, OH and I was fortunate to find a nice young couple to rent the downstairs unit right away (smaller unit - 2 bed/1 bath - $750/month). They're young musicians, great credit scores, with a 1 year old daughter and just seemed to be in love with the place. I was very happy to rent to them.

I just found a 3 young women to rent the upstairs unit (which is larger - 3 bed/2 bath - $1000/month) and they submitted their rental app tonight. Not bad, but they're all young 20's and just don't have a lot of history to go on. They don't seem like the party type, but I don't know for sure.

The same night, I received an email from the parents of the downstairs tenants saying that they'd like to rent the upstairs unit even though they live in Maryland and wouldn't be here very often. They'd like to be close to their children & grandchildren. The catch? They offered $850/month.

On one hand, I could have a largely unoccupied upstairs unit which would decrease my chance of wear & tear as well as regular service calls. The two car garage would be wide open for my downstairs tenant and they'd likely be very happy to have family close. On the other hand, I'd give up $1800/year for this convenience.

How would you approach this? Is it worth the convenience? Any experience renting to people who are rarely in a property?

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Re: Choosing Between Two Good Tenants
« Reply #1 on: June 10, 2014, 12:56:03 AM »
How sure are you that your lovely downstairs couple do actually want their parents/in laws able to live on top of them any time they want?  Have you asked?

Annf

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Re: Choosing Between Two Good Tenants
« Reply #2 on: June 10, 2014, 04:49:23 AM »
I'd go with the parents. Can you get a longer term lease signed?  That's worth something too. 

CowboyAndIndian

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Re: Choosing Between Two Good Tenants
« Reply #3 on: June 10, 2014, 07:40:22 AM »
I'd go with the parents for a couple reasons,
  • Older couple, so will not party like the 3 young women.
  • Less wear and tear from an older couple compared to 3 young women.
  • If you are paying the utilities, you save, which may make up the difference in rent

rmendpara

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Re: Choosing Between Two Good Tenants
« Reply #4 on: June 10, 2014, 08:24:50 AM »
There are definitely some facts missing, (net lease, gross lease, etc), but in general, I'd say try and get them to sign to a longer lease for a lower amount.

Maybe offer them $1k for 12 mo lease, or $925 for 24 mo, or 850 for 36 mo?

You didnt' mention your costs/mortgage/etc on the property, so I can't really judge how big of a deal the $1,800 is to you?

For reference, I have a condo (in my home town) that I rent to some friends for $1,200/mo, as I had to move out quickly and they were willing to go in immediately. I trust them, generally, and know they wouldn't intentionally do anything to cause harm to my property. I think it could be worth $1.3-1.4k if I listed it, but it's just not worth the hassle right now (it's all equity, so I don't have a mortgage to worry about).

In any case, I think a longer term lease would make the lower rent much more attractive.

waltworks

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Re: Choosing Between Two Good Tenants
« Reply #5 on: June 10, 2014, 08:31:25 AM »
Assuming the young couple is aware of/happy with this - rent to the grandparents! That's going to be an awesome, stable situation for everyone and you won't have any party concerns. Happy tenants are good tenants, probably worth the $150 a month IMO.

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CommonCents

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Re: Choosing Between Two Good Tenants
« Reply #6 on: June 10, 2014, 09:32:42 AM »
You can also try negotiating with them, and make them realize you are giving them a break.  Let them know you have a set of qualified buyers at $1000, but you do appreciate couple #1 so you'd like to work something out.  Can they do $900 for 3 years, etc.?

TrMama

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Re: Choosing Between Two Good Tenants
« Reply #7 on: June 10, 2014, 09:53:47 AM »
I'd try to negotiate with the parents to increase the rent slightly, but ultimately I'd probably take the $850/mo. As long as the young couple want their parents living upstairs this sounds like the best option for everyone. The two tenants aren't likely to complain to you about each other and the older couple aren't likely to split up leaving only one to pay the rent. The likelyhood of the 2 young women remaining in place for a year is pretty low.

ritchie70

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Re: Choosing Between Two Good Tenants
« Reply #8 on: June 11, 2014, 07:53:19 AM »
It sounds like the grandparents are basically looking to pay to add guest space to the downstairs tenant's space since they live in Maryland and won't be there very often.

Make sure you do all the same due diligence on the grandparents as you did on the younger women. I'm financially stable, tidy, responsible and take care of things, as does my wife, but her mother is the opposite of all of that.

Assuming they check out, I see one potential down-side to your plan: when they decide to move, you're going to go from fully rented to nothing rented pretty quickly. You should see it coming, but 100% vacancy rate is less good than 50% vacancy rate.

arebelspy

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Re: Choosing Between Two Good Tenants
« Reply #9 on: June 11, 2014, 07:37:24 PM »
I wouldn't assume it would be used that much less - it very well could be turned into a guest space (or party area?) for the downstairs tenants when parents aren't there.  And/or they may try to sublet it via something like AirBnB to recoup some of the costs when they aren't there, with their kids downstairs managing it.

All in all, I wouldn't assume that much less wear and tear, personally.

Agree with those trying to negotiate them upwards.
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Rainman480

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Re: Choosing Between Two Good Tenants
« Reply #10 on: June 11, 2014, 08:59:01 PM »
Thanks for the well-considered replies to my first post, everyone!

To fill in a few blanks - the mortgage is $1035/mo and the downstairs is already rented at $750/mo. The plan was for the upper to go for $1k, but then I received that offer for $850. Tenants pay all utilities. I come out pretty nice either way, but the plan was always $1750 in monthly rent. Home purchase was $110k, so I thought it was a good find for my first rental.

Post-script: I wanted to handle it delicately and not take a chance at getting off on the wrong foot w my new downstairs tenants, so I carefully replied to the parents that I had very interested tenants upstairs that were willing to pay $1k, and that I wouldn't feel right renting the apartment to someone offering less. In fact, it may be viewed as discriminatory (same ethnicity - maybe this was stupid to say?). If they were willing to offer $1k, I'd be more than willing to consider them. They immediately responded and said that they wouldn't have offered if they knew I had a tenant lined up, and best wishes moving forward. Also included a signature in the email this time - father is CFO of a large corporation. At least they were legit!

Post-post-script: When I mentioned it to my downstairs tenant the next day, they had no idea their parents were going to reach out to me. They had only asked for my name in conversation. What the heck? Anyway, upstairs passed background/credit check & security deposit is coming soon.

arebelspy

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Re: Choosing Between Two Good Tenants
« Reply #11 on: June 11, 2014, 09:34:21 PM »
Cool.  Good choice, especially given tenants downstairs didn't know.  Good luck!
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with two kids.
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