Two year leases VS One year leases

[Sam Leon]

I know many of you do month to month.

I personally like a one year lease.

I was asked by an applicant today if she signs a 2 year lease if I would discount the rent a little.

I told her I would give her one free month spread over a 2 year period, so instead of X per month, it would be X times 23 divided by 24, rounded to the nearest $10, whatever it comes to.

But then I thought about it, and I wonder what is the real benefit of a 2 year lease?

The penalty of an early lease termination is the same - 2 month's rent. I have never been able to collect that anyways except for taking the security deposit.

I am not sure a 2 year lease adds any REAL comfort, only PERCEIVED.

The tenant has a real benefit in that they know I can't raise rent on them on year #2.

If there is no real benefit to me, why should I discount? Why should I even consider a 2 year lease?

[Justin B.]

I own 5 SFR's and 2 of them have 2 year leases.

One we bought with the tenant in there already and she's been there for 5 years (3 under our ownership). She wanted assurances that the rent wouldn't be raised for 2 years. So we did a 2 year lease. She's never late and keeps the place in great condition. Easy decision.

The other property, we bought and leased on a 1 year lease. after 1 year of 12 payments on time and seeing the property in great shape (they even did some landscaping, imagine that), we offered a 1-year lease at a $50/month hike or a 2-year lease at the same rent he had last year. They choose the 2-year. Again, easy decision.

Like some others have said, it's not really about the lease but the tenant. If you have a great tenant, then do whatever you need to (within reason) to keep them. For me, not having to worry about these 2 properties at all for 2 years is worth a small discount for me (because I know the tenants are great and my risk is low). Again, at the end of a 1-year lease, they can always move out ad missing just 1 month's rent + any rent prep you have to do for the next tenant can be far more than what you've discounted the 2-year lease. I hope my situations help you decide.