Q. I have a tenant that has lived in my property for 6 years. They are looking to renew their lease again. Are there any advantages of getting a new tenant versus continuing to lease to the old tenant?
A. This is an interesting question and a lot depends on the tenants themselves and how you have been handling them. There are advantages and disadvantages to both scenarios.
When considering retaining a long-term tenant there are several things to think about. First the rent -do they pay on time each and every month? If there was one stray rent payment along the way, I wouldn’t stress about it, but if it is a habit I would think twice about keeping them. In my experience once someone begins to pay late and get behind it only gets worse. Sometimes it is worth it to cut your losses. Aside from paying on time, have you been keeping the rent at market or close to market value?
It is my philosophy that if you know you have a good tenant that pays and takes good care of the property, it is ok to be a few dollars below market. You know you have a proven commodity in that tenant and no vacancy. If a property is vacant even two weeks it can take a year or longer to make up a $50-$100 per month increase. Additionally, when you get a new tenant you do not know for sure if they will pay and take care of the property even though you do a thorough background check.
Another consideration in keeping a long-term tenant is maintenance. Even if they take exceptional care of the property, carpets need replacing at some point or they deteriorate, especially with our sun. Walls need painting or they dry out. Kitchen and bath cabinets (especially press-board) can fall apart even with the best care. These are items that are very hard to do and more costly in an occupied property, which could be a consideration in whether or not to renew a lease.
Sometimes long-term tenants begin to feel as though the property is theirs and not yours; they take liberties without asking, such as changing landscaping or painting. If this is the case, you need to decide if this behavior is acceptable to you and whether what they do is actually an improvement to the property.
If you continue to retain a good long-term tenant, you have no vacancy factor, just a steady income stream. You avoid added expense for normal routine wear and tear maintenance between tenants. You have also saved yourself a lot of time in preparing and placing the advertising. You have saved even more time preparing the property for turnover, driving there to show it to prospective new tenants, reviewing completed applications and following up on those. Long-term tenants can be a win-win situation for both landlord and tenant. Remember, even if you have a long-term tenant that is paying on time, you need to get out to the property and be assured it is being cared for properly -do not wait until they move out to check up on it!