Author Topic: Sub-leasing vs finding new tenants?  (Read 2016 times)

bittheory

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Sub-leasing vs finding new tenants?
« on: August 19, 2015, 02:58:19 PM »
My awesome tenants, who have only been in our house for 6 months just recently closed on a new home in the area and will be moving out at the end of October. The lease has them through Feb 1, so this technically breaks it. In some ways this is good as rents have risen considerably in the area and we have a baby due around the time the original lease is up.

There is a sub-lease clause in our lease, but I'm wondering what everyone's experience is with having your current tenants sub-leasing vs. finding new renters entirely? I'm thinking it will be more work for me to find the renters, but is probably the right call in the long run.

Has anyone had a similar experience? How did you handle it?



Jesstache

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Re: Sub-leasing vs finding new tenants?
« Reply #1 on: August 20, 2015, 09:45:53 AM »
If it were me, I would find new tenants myself.  I trust my own judgment more than I do others.  Will they pay the $ run a credit and background check on new tenants.  Call old landlords and verify income?  Sounds like a good bit of work for little reward on their part.  They also might not know the best way to go about even finding renters or what rules to shoot for on income vs rent ratios, etc.

Also, just think of the worst case scenario and imagine how you'd feel if the people they chose to sub-let to were desctuctive and didn't pay rent when it's ultimately up to you to evict them.  I'd be thinking, "If I had screened them myself, I wouldn't have to be dealing with this headache." 

Best of luck!

K-ice

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Re: Sub-leasing vs finding new tenants?
« Reply #2 on: August 29, 2015, 09:53:07 PM »
You say they are awesome so I might trust them to find the person but you have veto power.

As a renter my 3 places were all found via sub-lease or technically an assignment of lease.
I knew the tenant, they recommended me to the landlord, I took the place as is. No advertising, no renos, I was an easy new tenant.

Careful with sub-lease vs breaking & new lease. The difference is a sublease is usually when your original tenant is just finding someone for a short period and they want to return. (Ie summer in a student rental). They remain responsible for collecting the rent from the sub tenant and paying you.

I think what you, and they, want is a new lease. Check your local rules & forms.

Now as a landlord if a tenant wants out early I put the onus on the current tenant to show the place and find the tenant. They are breaking the lease and technically responsible for rent until February.

Of course you need to do your due dillagence and check references. I also help the tenant by making a good add and photos but I leave the showing and responsibility to them.

But stay ontop of them and if they have had no showings in 1 week you better take over.



clarkfan1979

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Re: Sub-leasing vs finding new tenants?
« Reply #3 on: August 31, 2015, 11:39:08 PM »
Let them do the majority of the work and if you don't like the people they pick, then veto it. It might be a little uncomfortable if you veto it, but if you feel comfortable with it, go for it. If you feel pressured in going with someone you don't trust, then it's a veto. They are not going to be as motivated as you to find a good tenant. However, I would at least give them a chance, because I don't think you have anything to lose.

What is the common penalty for breaking of the lease? Loss of deposit? Because I have student rentals, they are responsible for rent until the end of the semester.

bittheory

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Re: Sub-leasing vs finding new tenants?
« Reply #4 on: September 01, 2015, 10:08:02 AM »
This actually benefits me a lot, as rents have risen considerably in the past 9 months. I am showing it starting this weekend at a $150 rent increase. Still a lot of interest.

However, I'm thinking about adding a "lease break penalty" into my new lease. What does everyone think is a reasonable amount for that? $200, $500, $1000?

Thanks.


K-ice

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Re: Sub-leasing vs finding new tenants?
« Reply #5 on: September 01, 2015, 10:56:59 AM »
As for the lease break clause check your local laws. It might not hold up.

I doubt you can take anything more than the security deposit.  Caution, call it a “security deposit” not a “damage deposit”. Again check local rules. In my area a “damage deposit” can only be applied to damage, a “security deposit” can be applied to unpaid rent, damage etc.

I have been a LL in two different areas with very different rules.  In one area you cannot penalize someone for breaking the lease.

You can take any missed rent out of the security deposit or go after them in court for more.

But you must prove that you have tried to rent the premises. If you get it rented the day after they leave there is no charge even though it was a major inconvenience for you & you had to pay for advertising, cleaning etc.

If you are trying to rent it but can't, or lose more than 1 month rent, then you can go after the tenant but I would be wary that a judge might say your place it too expensive, etc.

In the other area the renter is responsible to pay the rent in full until the end. They could technically be on the hook for thousands. So, in that area it is much more common for the renter to be rpoactive and assign the lease. 

bittheory

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Re: Sub-leasing vs finding new tenants?
« Reply #6 on: September 01, 2015, 11:44:56 AM »
As for the lease break clause check your local laws. It might not hold up.

I doubt you can take anything more than the security deposit.  Caution, call it a “security deposit” not a “damage deposit”. Again check local rules. In my area a “damage deposit” can only be applied to damage, a “security deposit” can be applied to unpaid rent, damage etc.

I have been a LL in two different areas with very different rules.  In one area you cannot penalize someone for breaking the lease.

You can take any missed rent out of the security deposit or go after them in court for more.

But you must prove that you have tried to rent the premises. If you get it rented the day after they leave there is no charge even though it was a major inconvenience for you & you had to pay for advertising, cleaning etc.

If you are trying to rent it but can't, or lose more than 1 month rent, then you can go after the tenant but I would be wary that a judge might say your place it too expensive, etc.

In the other area the renter is responsible to pay the rent in full until the end. They could technically be on the hook for thousands. So, in that area it is much more common for the renter to be rpoactive and assign the lease.

Thanks for the reply. I think I'll include a section that states the security deposit will be applied towards rent if the lease is broken early and no renters are found. And good point about security deposit vs. damage deposit. I guess the problem is if the property is damaged, and you're using the security deposit to cover rent and not damage, then what do you do?