Short or Long Lease?

[Logan Sierra]

Hey BP,

Bottom Line Up Front: I would love your feedback on whether to do a three-year lease or a more traditional lease

Background:

I am in the military and my family and I are moving from Chesapeake, VA to continue my career elsewhere. My wife and I have decent equity in the house and have decided to rent instead of sell. She is a master networker and has already located potential tenants. Based on some initial screening they are about as good as tenants could get—military couple, high ranking officer (Chaplin), no pets, no kids (we did not ask, this it was mentioned by them.) Either way, we still intend to have them complete standard tenant screening as a CYA and to consider Fair Housing Laws.

This will be the first rental my wife and I take on. Long story short, if these tenants or similar situation tenants do not work out, we intend to use paid PMs in the area (standard 10% fee).

In talking with these potential tenants, they will have three years military orders in the area and the military member is planning to retire and move elsewhere after these coming three years. They have previously only rented direct from the owner and have almost always done long leases.

At the current moment, we could likely get $2900 per month in rent (pure cashflow around $150). Based on my understanding of rent increases in the area and the lack of laws I found dealing with how much rent can increase in VA, we could raise the rent around 3-5% reasonably per year ($90-145 per month = $1080 - $1740 per year = $3150-$5220 over a three-year period). In my head, I am not sure that even the potential of increased rent is worth losing out on tenants in place. My wife and I are not depending on cashflow for this property. The goal is mortgage paydown and a property that allows for a flexible transition from the military in around seven years.

Also, based on when we are putting the property on the market, we would likely do a 14 to 15 month lease to get our house back on track with high volume moving season (on the market in Feb/Mar of 24).

Question: What would you do in our situation; a 36-month lease or a 14 to 15 month lease?

I am sure there is more detail needed for you all to help and more considerations that we have not thought of, I appreciate any assistance in advance! Thanks!

-Logan