What would you do? Peace & Quiet vs. $$ Keep quiet tenant OR fix apart & make way more $.?

Question

I recently bought a duplex and we live next to our (very quiet) tenant who is an older guy who is on a fixed income (not much more then monthly rent) has really bad credit, no savings and has lived in the apartment for more then 20 years. He is only paying $600 a month (which we usually don't get on time) for an apartment that we could easily rent for $900-1000. Would you kick out the curent tenant or not???

Answer 1

Well, consider that fixing the place up for a new tenant will cost a considerable amount of money, especially if the old guy has been there a while. You'll also have a loss of rent for a while as you do the renovations. Then there's the fun part: where you get to screen the applicants, not really knowing what kind of tenants you'll get, whether they'll pay on time, how noisy they'll be, etc.

Personally, I would never buy a duplex and live in half of it, unless it was a family member or something. But, in your situation, I would say to wait a while. If the late rent becomes a problem, you can go through with the eviction. But, you're right - a good tenant can be priceless.

Answer 2

I wouldn't kick him out, but I would raise the rent up to a more reasonable number.  Since he is such a good tenant you could still keep it below market rent (maybe $850-900) but giving him $300-400 per month on a $1000 rental is way to much.  Maybe he'll surprise you and stay on, but if not you are making more money anyhow.  Its great to be nice, but this is a business and if you are not up to running it as a business you'd probably be better off selling the place.

Answer 3

I wonder about the condition of the apartment.

Will you have to invest a lot in order to get the unit in acceptable condition for a tenant who is to pay $300-400 more monthly? Are you in the position to do that?

Are you sure that you cannot raise the current tenant's rent by $100?  Maybe that is a compromise you can manage- he stays, the quiet stays and you can take a little more for the property which is worth it.  I would find out the last time the rent was raised by previous landlord then put it to the tenant.  He can either pay it which is still a bargain or he can find another place to live.  This way you are not kicking him out.

Answer 4

I say keep him.

You have a guaranteed $600/mo income & a quiet tenant. If you kick him out, you will not have any income until you find a new tenant. Then you have no guarantee they won’t be a problem with that new person.

If he’s lived here for 20 years, when was his place last updated?  How much would it cost to update to appeal to modern taste? With an extra $300/mo how long would it take you to pay for those updates?

If it took you three months to find a new tenant & you have to put in $5,000 to the unit, that’s $6,800 you’re out. It would take you nearly two years of continuous renting to make that back.  Is it worth it when you have no guaranteed occupant?