Cash Bloodletting from Rental Home Subletting

A house on my street is a rental home.  The owner had a long term tenant who always paid on time and was an agreeable guy.  It seemed like a good situation.

However, every few months I would see moving trucks parked in front.  I wondered if the tenant was moving out, but sure enough, days later I would still see his human size dog running out his front door (as I would shield my 2-year old son from his “affections”).  The tenant hadn’t gone anywhere.

So what was going on? 

The tenant was a serial subletter.  He would rent out rooms to strangers.  It seemed like a good way to make extra cash being that he travelled a lot for work and lived alone (besides the aforementioned gigantic dog). 

But something went really wrong recently.  The tenant didn’t click with the newest subletter and they got in a physical altercation due to undone housework.  His dog attacked the subletter (poor guy!) protecting his owner and the subletter needed an ambulance.

An ambulance, several police officers and animal control showed up at the house and the subletter wound up getting a restraining order against the tenant.  Now the tenant was not allowed to go to his rental home.  I had a new neighbor, and not one who was actually on a lease.  However, due to the legal system, he had rights to the house and the tenant was essentially homeless because of the restraining order. 

It was a mess for the owner.  The subletter had to be evicted (which took a month or two) and it left the owner out thousands of dollars. 

So, is subletting evil?

Generally-speaking, yes, I wouldn’t recommend it.  However, if done properly, it can work well to keep a house occupied.

The two ways to avoid subletting bloodletting:

1. Be involved.  If a tenant wants a subletter (and this is applicable for any new home occupant), a rental application needs to be run.  Owners need to know exactly who is going to be living in their rental home.
2. The new occupant needs to be on a lease and the security deposit situation needs to be addressed (who has rights to it now?).

As a landlord, it’s easier to just let tenants do their thing as long as rent is coming in (like in this instance where it happened for years without incident), however it can come back to bite (pun intended).

As a Charlotte property manager for many years, we’ve picked up many good tenants from allowing tenants to add additional occupants to their lease.  However, we’ve never budged on the two criteria above.

Don’t let subletting turn into a mess.  Control the situation, run a rental application, and (if approved) get them on a lease!

Happy Landlording!

Brett Furniss is a property manager at BDF Realty (Charlotte Residential Property Management), the trusted real estate advisor for Charlotte landlords & Home of $100 Flat Fee Property Management.   BDF Realty utilizes their innovative Pod System for exceptional customer service in residential property management, home repairs, and home sales for single-family homes, Uptown condos, and town homes in the Charlotte-Metro Area.  Contact Us Today!