Monthly Rent Renewals, Or Leases, & For How Long?

[Dominic Balconi]

Do you have your tenants renew on a monthly basis, or do you do leases? 

If you do leases, for how long? 3 months, 6 months, 12 months, 36 months? 

Why did you choose what you choose and have you considered changing?

Thanks everyone for the responses!

Peace, Love & Positivity.

Sincerely, Dominic Balconi,

Future BP Podcast Guest

[Michael Boyer]

I like to start with 1 year lease (sometimes, though rarer, a six month). 

Why? 

It gets those tenants with a longer term orientation in my opinion.

I am no vacation rental and turnovers are the bulk of the work and cost as a small time landlord. Longer term the better. I used to so more seasonal tenants (like just for summer) but it wore me out.

That said, after someone has settled in and renewed a few times, I will be open to the option of letting it go to month to month. In fact, my longest term tenant (coming up on nine years) is month to month (quit doing lease renewals at about 5 years). 

The renewal is a good time to look at the market rates, however. Month to month gives flexibility (for them and me) and much may depend on your larger strategy, scale, and market.

 For example, if all other rentals on the market are only doing one year, I might offer a six month option just as a competitive advantage (FYI about 80% of my 6 months folks renew it at least once). Some folks just like and value flexibility. 

Or if I was doing a seasonal rental again, I would elevate the rates and go for the 4 month tourist season. So the point being the term may merge with your niche or strategy.

Today, I focus more on the landlord tenant relationship and getting good people (superb payment and little or no problem behaviors) and the exact term seems to take care of itself. I renew some folks or go month to month with others and it rides with attention as needed.

On exception, the one condo I still have rented has a six month minimum rental term. That is required by the association. And I think if I had alot of rentals (50+), I would be very careful to avoid too many month to month (for risk of mass vacancies at one time) and try and stagger terms more.

Best of luck!