Owning a rental property can be a great way to build long-term wealth and short-term cash flow. While there are clear advantages that come with owning a rental property, there are downsides and risks as well. One negative situation that can arise is if the tenant wants to break the lease. If your tenant wants to break a lease, there are several things that you could do.

Negotiate a Fair Buyout

The first thing that you should try and do is negotiate a fair buyout with the tenant. While the tenant is obligated by the contract to pay through the term, collecting on it can be challenging if they stop paying. In many situations, the best option would be to simply negotiate a fair termination fee in which you will change the termination date for a one-time payment. A standard fee for this should be 1-2 months of rent. 

Stand Firm

Another option that you will have is to stand firm and require the tenant to continue to pay. In these situations, it would still be helpful for you to help the tenant find another option, which could include helping them to find a sub-tenant or agreeing to help them find a replacement tenant. While this may be a good situation and option, you still run the risk of the tenant leaving early. If this happens, you will have the right to hold on to the security deposit, but you could be in a tough situation for a few months if you do not have a replacement tenant lined up. 

Know the Laws

Most importantly, if a tenant wants to break the lease, you need to know the local real estate laws. Larger cities have clear laws that dictate what would happen in these situations. Since many of these laws tend to be friendlier for the tenant, it is important that you know your rights and the rights of the tenant. This way you will not accidentally overstep your bounds, which could cause bigger issues for you.

If you need a property management consultant, contact the team at Occupancy Solutions today.