High Rent/Turnover Vs. Low Rent/Cash Flow
Which is the lesser of these two evils? I currently have an elderly couple whose lease is up 2005. They have expressed an intrest in living there indefinetly. They pay on time and keep up w/ mainteneance ect. But recently a younger professional family w/2 kids want to rent the place and are willing to pay me $ 400.00 per month more than I am getting from old couple!
Any advise/suggestions would be appreciated.
It sounds like you know what you got with the old couple. A good steady cash flow, with little or no problems-right? Are they paying the market rent? It doesn't make sense to me to get rid of a good tenant for one I that I don't know just because someone offering more me money (with no type of guarantees).
I would look for another house to put the younger tenants in and hopefully profit from both.
Just my 2 cents.
-Adam
I agree with adam completely. Why give up your cake to go and eat bread?
Thanks for the input, but 400 is a nice increase and they have good jobs. I was considering having a wage asignment added in the lease agrement for the young couple and finding another house for the existing older tenants. What do you thimk?
Frog, yes the $ 400 increase will slightly go over market rents, but not by that much! I normally advertise my homes for far less than what the market rents are to rent quickly. My cash flow is $100 now (due to cash out refi) but the $ 400 increase will allow me to get great cash flow for 1 last year before i sell property next summer. Normally would prefer stability over uncertainty, but I don't intend on keeping the property after 2005. Hence the increase should be worth the headaches, if any. Yeah, the old couple will have to be relocated.
Thanks for the insight guys.
At that rate, it will take you 4 years to cash flow w/ the old folks what would take you 1 year with the young folks. If the rent you are charging is $300-400 less than market and and your cash flow is only $100, your ratios are off and you aren't making enough. (Well, I wouldn't be making enough....)