start new tenant with MTM or year lease

[Daniel Okeefe]

Hi BP family,  Does anyone start off a new tenant with a MTM term or maybe a 3-6 month lease before committing  to a full year lease ? In an effort to make sure  you are happy with the tenant and is a good fit ?  I Have a  vacancy coming up and we are new at the screening process so was thinking a short term start with someone that passes the basic checks IE ( income, criminal, evictions etc. )  would be a good idea but didn't know if that may effect the quality of tenants I have apply for the apartment. As a landlord I like the comfort of a yearly lease but wondering if a shorter "trail" period would be wise and if other LL would prescribe to this approach. 

Any feedback or experience is greatly apricated !

[James Hamling]

Quote from @Daniel Okeefe:

Hi BP family,  Does anyone start off a new tenant with a MTM term or maybe a 3-6 month lease before committing  to a full year lease ? In an effort to make sure  you are happy with the tenant and is a good fit ?  I Have a  vacancy coming up and we are new at the screening process so was thinking a short term start with someone that passes the basic checks IE ( income, criminal, evictions etc. )  would be a good idea but didn't know if that may effect the quality of tenants I have apply for the apartment. As a landlord I like the comfort of a yearly lease but wondering if a shorter "trail" period would be wise and if other LL would prescribe to this approach. 

Any feedback or experience is greatly apricated !

 What your not saying here, but inferring, is the most important part, because it's incorrect. 

Your with this thought that if everything goes bad, that your going to be able to easier, quicker get a bad tenant out on M2M vs a term lease. That's simply not true. 

What happens with trying to get out a "bad tenant"?: 

(a) they just say "F-U" and they won't leave, so, one has to file for eviction. - Ok, does the term of lease change this? Nope. Someone say "no, I won't go" term changes nothing. 

(b) unit damage, a tenant is tearing up the place. - Generally speaking term length means nothing BUT we do see this happen more frequently with shorter term, and less often the longer the term. I call this the "Rental Car Factor". Someone who jumps into a short term, or uber-short term situation, ya-gotta wonder on there mindset. Someone who is thinking 3yr+, think of there mindset. Who's more likely to not give a damn about the property, someone thinking this is just a "4-now" place, or someone who is thinking day 1 this is "there home". Tenant Psychology, this is considered far too little. It's a major item. 

In the end, yes M2M LOOKS like it would be "easier" because you can just suddenly stop leasing, but in reality, it's a giant invitation for the kinds of tenants a person does NOT want to attract. In standard rental, the magic words to hear from a tenant is "I am looking for LONG TERM, I don't want to have to keep moving", ahhhhh, that's magic to my ears!     The truth is, a landlords #1 focus on screening should NOT be about getting paid, it should be RISK EXPOSURE, who will best take care of the property! A missed payment sucks, but tenant damage can easily equal 6 months rent, even a year+, not to mention the down-time to do repairs. Tenant damage should be the #1 focus, and mitigation of that. THEN it's about DURATION, getting that "cruise-control" because vacancy is the #2 most expensive cost factor in the mix. THIRD is actually payment reliability. 

By the #'s, when looking at data, this is the CORRECT order of what "costs" a landlord the most.    In our portfolio, we hover right around 98% rent collected in any given month. Non-payment is a 2% and under issue. It makes no sense to focus the whole thing to such a rare impactor, especially being one of such minor impact. UNIT DAMAGE is the #1 most expensive item, so focus there and we do that by knowing the indicators who who's most prone, and adverse to do such. Short term tenants, M2M are the #1 group for unit damage.