Early Turnover on Rental House #2
We had our first lease breakage on a rental property at the beginning of the year. The tenants had moved into House #2 in August on a 1 year lease and everything was working extremely well. The tenants were very low maintenance, never had any problems with late rent, and we were bringing in a higher rent than the previous lease.
Things quickly went south right before Thanksgiving. I got a call from the tenant saying the backdoor of the house had been kicked in and the they were robbed. Obviously the tenant was distraught, it was an unfortunate incident, we were going to be several hundred $$ for repairs, but I expected this to eventually blow over. I wrote it off as a sign of the times with the economy tanking and this property's location near downtown.
I immediately hired a contractor to come out and secure the back door within hours and eventually repair it. I even had the contractor replace the door with one without windows because the tenant indicated she would feel safer with it. Within a week we had the damage completely repaired and I thought things would get back to normal.
About 2 weeks later the tenants notifies me that they no longer feel "safe" at the house and want to move out. They had found a new place and wanted to know how they could end the lease. I felt terrible for them since they had been robbed, and understood that the no longer felt safe so I wanted to help them as best I could. Timing couldn't have been worse given it was in the middle of the holiday season so I said I would put the house up for rent and as that they cover rent until I find a replacement then I would be willing to terminate the lease.
By the end of December I was getting a little concerned - the holidays were about over, but I really wasn't seeing any interest in the house. Given we had just closed on our new home, we weren't in a position to leave the house vacant for a prolonged period - even if the tenant agreed to keep paying rent - I knew once they were out it would be hard to get any additional rent from them.
Luckily the 1st week of January I finally had a trickle of people interested in the house and had someone who was interested in signing a lease if I would lower the rent $40/mo. After the prospective tenant checked out I agreed to reduce the rent with an 18month lease which would help me get the house back on a typical summer rerent cycle which will make it easier to get the house rented again.
I guess this is in-line with this article that suggests Raleigh area rent rates are dropping significantly.
Related in Rental Property:
2012 Passive Income: Rental Property (Feb 10, 2013) Its been several years since I did a thorough analysis of our rental property performance and investment return. Here is an analysis of our 3 rental properties for 2012 that should give a pretty reasonable view of how these investments...
Why Invest in Rental Property (Mar 13, 2012) The real estate investing infomercials of the housing boom suggest that real estate could make you rich - the benefit of real estate being exponential returns of your investment. While I only have a few small real estate investments there...
Rental Property Investment Breakdown (Sep 27, 2011) Here is some overdue financial record keeping from our latest rental investment in August 2011. This breaks down all our out of pocket costs to purchase the property and get the 1st tenant in place. Out of Pocket Investment in...