One of my “investment” rentals is negatively cashflowing about $300. I decided that I either need to raise rent or just sell the property and get out of the business, preferably the latter. So, I raised rent by $100 on my Tenant. We have a month-to-month contract. Yea, that pissed off the tenant. The contract states 60 day notice, but I’m pretty sure the tenant won’t pay the full rent for July. They may not even pay July’s rent at all. So, I’m getting ready for the eviction. I’m pretty sure that I’ll be sending a 3-day notice to comply or vacate on July 3rd. All you experienced landlords, what do I get to expect for the rest of summer? Is there a way to speed up that 60 day notice if they don’t pay? Or partially pay? I live in Utah.
Dean
Your 60 day notice is for rent changes, right? If they don’t pay, that goes out the window and then you’re bound by your state’s eviction law timeline. $100 seems kind of steep all at once. If it’s been negatively cashflowing for awhile, it sounds like this should have been addressed long ago. Smaller rent increases would have been easier to swallow over time.
most places have a limit as to what you can legally raise your tenants rent per year. I would check to see what may apply in your area. I agree that $100 seems to be a bit much for a rent raise, unless your tenants rent is a few thousands bucks a month, then it may fall within the percentage increase allowed. But I doubt that’s the case here.
GooD LucK! :beer
Depending on how pissed they are… you can expect a few holes in the wall, carpet will be a mess, plumbing will be a disaster. If they are REALLY piss, you get instant cement in the sinks and toilets before they leave. You can expect thousands in damages if it’s a nice house. If you had them on a month to month, it would have best to just let them know you are not renewing the lease. THEN, fix it up and rent it out for $100 more or just sell it and get out.
Exo
They’re pissed off. They told me over the phone that they’re not gonna pay the higher rent and that they won’t leave; I’ll have to evict them out. :rolleyes That’s fine. I’m already getting the paperwork prepared.
Their current rent is $1500, so, moving it up to $1600. It is a 3000 sq. ft. home on 1/4 acre lot. Plus, I just finished landscaping the entire yard, so there is added value. There are plans in the works to re-do the kitchen floor, too. So, $100 really isn’t extreme. My mortgage is $1800+.
I have another rental that is 1000 sq. ft. smaller and the rent is $1295. Going off of straight numbers - $ per sq. ft. - I should be charging just under $1800 per month for the larger home. However, there such an overbuild of new house around the area, that its nearly impossible to get $1600. If I keep renting, I’m unquestionably out of the business. The only way I can think, and I’ve also been advised, to get the house sold is to have it vacant. Thus, it isn’t a setback if the tenants rent elsewhere. I won’t be re-renting this house. Either it sells, or… :flush
That’s good to know that once they don’t pay the rent, the Utah State laws take precedence to the month-to-month contract. That means I can push the eviction up to 30 days after the comply or vacate notice.
Dean
Exodallas had a good point about not renewing the lease and re-renting at the higher amount. Not renewing a month-to-month could be interpreted as maybe the owner wants to sell the house or is moving back to live in it, etc. Unfortunately, the rental amount doesn’t go up linearly with square footage. In your market, you’re seeing the same thing I see where I’m living. The only people who can afford to have rentals either:
bought the house years ago at a much cheaper price
bought at a huge discount
lose money each month with their pet alligator because they can’t even get enough rent to pay the mortgage
If you’re going out of business, then I would offer them cash for keys. I am normally 100% against that, but you won’t be setting a precedent or have to worry about future tenants taking advantage of you if you’re not going to be in business. I would offer to give them their deposit back plus half a month’s rent if they will leave voluntarily by the end of June. That will be cheaper than an eviction and may prevent them from damaging your property.
Good Luck,
Mike
If your only hope is to sell the house then you should call immediately do as mike has said. give them an incentive to find another place and ask them to clean it very well. this will cut down your time on cleaining it out. but most importantly you get your house back right away without any more damage to it. and if they’re pissed then you better believe their gonna mess some things up. also we’re they good tenants ?? it seems wrong the way your trying to do this and you may have a lesson learning experience to deal with. if your tenants pay they’re normal rent amount and you try to evict check your areas laws on rent increases. it maybe illegal to raise it $100 on your tenant.
Yea, I know. None of this really sounds right. That’s the real problem, though: nothing about this house has have ever been right. Can I claim evil spirits? haha! Maybe I’ll just blame the builder. coughRichmondAmericancough Also, there is no decision I could make with this house that would not be sucky. Every decision sucks. Once the house is gone, I won’t be forced to choose only sucky decisions anymore.
Anyways, I didn’t raise the rent to try and kick them out. I raised the rent to try and stay in business - at least a bit longer than before. They didn’t like it, so they threatened to not pay, etc. etc. etc. Who knows. Maybe they’ll look around and decide that its not worth the hassle of moving. The guy has been a builder for 20+ years, so he knows housing laws to some degree. In Utah, you can be awarded 3 times monthly rent if the judge finds in your favor. I think that may convince the Tenants to behave themselves, even if they are thuroughly pissed. Yes, it is a gamble, but its a guarnteed loss if I keep renting the house.
In any case, you can believe that I’m handling this to the letter of the law without any deviation whatsoever! All t’s crossed and all i’s dotted just right. I’ve been extremely cordial and factual with my Tenants concerning my reasoning. Really, my Tenants are great people, and I truly have no ill-will towards them. I truly hope that everything works out as best as possible for them while they live there and after they move. Despite that, I didn’t get in the rental business to learn about the rental business (although that’s obviously a part of it all). I find no reason why I should suffer so they can benefit. I didn’t get in the rental business to run a charity. I got in the rental business to make money; this house doesn’t, nor will it ever, do that as a rental. My last class is going to be How to Evict - 101. The one thing I do know, once this house is gone, I won’t be getting schooled anymore on a monthly, sometimes daily basis.
Dean
That’s about a 6% raise at that price range, so the raise isn’t really out of line IF, and it’s a big if, rents in the area are all higher for a comparable house than what he has been paying.
Now he’s going to look around and if he can find something he likes for cheaper, he is going to move.
It doesn’t matter what your expenses are or how much money you need, tenants are very unlikely to pay over fair market rent. You raised the rent because you need more money? How’s that going to work out for you if the house is vacant?
On the plus side, any house is a lot easier to sell if it is vacant. You can clean it up spotless and agents can show it without giving notice.
It’s hard to sell with a tenant in place, because so many tenants will sabotage a sale and not want to cooperate by keepong the house clean enough to show.
I almost feel bad about telling everyone this, because I’ll probably be the root of creating a bunch of go-for-the-throat landlords. :evil So, I got the rental payment yesterday (late again, by the way), and the renter paid the new rent increase. WooT! Now, I get to look forward to next months new higher rent plus a $100 late payment. I’m sure August will be fun. In any case, I am now living proof that you can increase rent and still get paid. Be wary, though. In my case, I was fully prepared to sell the house if I had to evict them 30 days later. Some of you may not be in that case, so proceed on a case-to-case basis. Enjoy!
Dean