Rental Property Investor · Shavertown, PA · Member since 2017 · 27 posts · 4 votes
So I finally did it; I just closed on my first four unit last week! I'm going to be house hacking and am so excited and eager to get going on the business side of things. But I have a question that I was hoping to get cleared up. At the closing table I heard from my lawyer and loan officer that they don't bother using a lease! I was shocked. I thought this was always done? When I asked why, they said it was just considered a month to month, with each payment almost acting as the lease. Also, if they had any issues it was easier to evict the tenant, not needing to pry over technicalities... Do any of you guys do this? It sounds pretty appealing honestly. I would consider it as long as I could still get a security and of course be doing things legally. What do you think?
Hey Matthew, I've done both month-to-month and year-long leases. As with many choices, there are pros and cons. I thoroughly interview potential tenants so I'm generally confident that they will be good for the long run and that's why I prefer leases... plus since I put in a lot of work on the front end finding the right tentants, I'd rather not be at risk for looking for new tenants for at least another year. It's up to you to consider your own preferences though.
You can write a lease for a year, or month -to-month or any other duration you both want.
Legally, no lease (or a verbal lease in certain cases) is a month-to-month in most (all?) states.
But why wouldn't you want a lease? A well written lease protects both you and your tenant and ensures you're both on the same page about a whole list of possible issues.
What happens when the toilet overflows? Or they want to invite their gf/bf/etc to live with them. Or they decide to park their RV on the front lawn... good or bad, you'll have a way to discuss issues with them.