I’d Like To Have Your Opinion On A Question
And then I will give you mine. A Tenant has a years’ lease, and is a good tenant as most of them are. You are the kind-hearted owner. Lease is over. Two choices; re-lease for another year or continue on under the roll-over provision in almost all leases. Drumroll: What is your answer?
I have always felt that after the first year, the lease is the friend of the tenant. If I am an owner, I want to use the roll-over. Two things could happen. You do not want to raise rents now, but in six months the rent situation changes and you would like to raise the rents. Can’t do it; you have a lease.
Shortly after the re-leasing, the tenant goes bad, and you would like to evict. If you are on a month-to-month, it is much easier as you can give a notice, and you don’t have to state any reason, if not under rent control.
Sometimes a tenant will say that the reason they want the lease is that they do not want a rent raise in the near future. You can satisfy this request without signing a lease. You can give them a written statement that you will not raise the rents for a certain period of time that you two agree on. Be sure to put a time period on the statement.
Final Note For Thought
For real estate agents and owners who are thinking about having their properties managed. Normally, PM rates are set as a percentage of income with a commission for leasing. A question that should be discussed on any contract that is signed is, “If the Property Managers re-lease the property, will there be a commission due?”
Here Are Some Other Questions To Be Discussed
Should we re-lease or roll-over? How much Security Deposit should we request? If the rent is $2,000 a month, how much should a prospect be earning to qualify? Who will hold the tenant’s Security Deposits? What will be the monthly fee, lease commission, handling an eviction, cost for handling a vacant building, re-lease fee if used, necessary reserve, when proceeds are to be disbursed, how often an accounting, how many people in the unit, pets-yes or no- or max size, amount Property Manager can spend without owner approval, who pays utilities, etc. and others.