Long Term Lease Question

[Ray Picazo]

Hello,

First I would like to say I am new to Bigger Pockets and this is my first post. I have been reading and learning here for a bit and for that I say thank you to all.

I live in California and purchased my first single family in Nampa Idaho. My property management company contacted me they have a good renter candidate that is looking for a 16 month lease. There are also looking for a $200 dollar discount off what my wife and I were looking for but we will still cash flow that being said.

Sorry for the long post but my question to BP is this. Should I accept the long lease or should I go for a 9-12 month instead? We were going for 9 month originally, but this will take us to Summer 2023 which we can raise the rent then.

Any thoughts/opinions will be greatly appreciated.

[Nathan Gesner]

Welcome and congratulations on your first post!

Unless the market is weak, you shouldn't be taking a discount. As far as I know, the market is strong in California and you should have no problem finding a renter at market rate for a one-year lease.

Secondly, most renters that ask for a lease longer than one year tend to break it early. Renters can't plan that far out. I used to allow two-year leases until I discovered about 80% of them were breaking the lease early, some in less than one year.

Finally, requests like this are a red flag for me. Many applicants will offer to rent for a longer term hoping you'll reduce the rent or maybe you won't screen them as well. Early in my career, I had someone offer to rent for two years and they negotiated a $200 rent reduction each month. They left after a year, did not pay their last month of rent, and the place had to be cleaned. The reduced rent cost the owner $2,400, they lost $1,200 on the last month's rent, and cleaning was $400. That's a total loss of $4,000 in an effort to lock a tenant in for an extra 12 months and reduce turnover costs!