How early do you sign a lease

Question

In my market, I usually get  notice 40-60 days before the end of the tenant's last month.  I put the property up for rent as soon as I can, find a tenant in 2-3 weeks, sign a lease about 3 weeks before they move in.  Usually zero vacancy, sometimes a week or two.  Only rarely do I have a whole month with the place sitting empty because I'm waiting for someone to filter through my screening process.  Even when that happens, when I do sign a lease, they move in 1-3 weeks after we sign.

Here is my question:  What's the longest period of time you are comfortable with between when you sign a lease and when they move in if the unit is vacant.  Specifically, it's the beginning of September right now.  I have a potential tenant that wants to move in at the end of October.  I appreciate that they are thinking ahead, and are going to give their landlord propper notice, but if I sing a lease with them this week... I will be committing to 7 more weeks of vacancy.  If I tell them I can't sign because I will probably find a tenant that wants to move in on the 1st, I could loose a good tenant... and if I don't find someone for the 1st...

I need to identify a break point for me such as "We don't sign leases more than 4 weeks before the move in date"  I'm looking for some input to help me identify that point.

Nathan Gesner · Answer

I make them pay the security deposit within 24 hours. It becomes non-refundable if they fail to rent the property but we release them from all other obligations.

Example: application is approved and tenant wants to move into a $1,400 rent on September 20th. I sign a Holding Agreement that says I am receiving $1,400 to hold the property for them. They agree to start paying rent September 20th and the $1,400 holding fee converts to the security deposit. If they fail to rent on September 20th, the $1,400 holding fee is forfeited and the property goes back on the market.

You have to be careful with wording. If you collect a "security deposit" then it is refundable. If you call it something else, like "holding fee" then it can be non-refundable. Check your state laws or consult an attorney to ensure you get it right.

Jon Holdman · Answer

When I sign a lease the tenants hand me a full month's rent and the full security deposit in cash or money order and I hand them the keys.  Its their unit as of that moment.

If we agree to take a unit off the market and hold it I use an "agreement to hold".  It requires an amount equal to the security deposit.  If the prospect signs the lease by the agreed upon date, the hold money becomes the deposit.  If not, I keep it and resume marketing.  The hold agreement says "nonrefundable" multiple times in large, bold letters.

Nathan Gesner · Answer

No more than 30 days. Be sure to include some form of termination clause in case they change their mind before occupying.

Dan Perrott · Answer

@Nathan G.  @Sam LLoyd - I agree with Nathan that using a hold of the market agreement is the best way to secure a property for a tenant until it becomes available to move-in.  Here is the leading statement in a Hold Off the Market Agreement that can be used.

RECEIVED FROM John Tenant, APPROVED APPLICANT,

THE SUM OF xxx Hundred and 00/100 *** Dollars, ($xxx.00).

xxx-Hundred and 00/100 *** Dollars ($xxx.00) of this sum is nonrefundable.  It shall be used for the purpose of holding off the market rental dwelling know as 123 Main street, Anytown, State 12345 for the period of  MM/DD/CCYY through MM/DD/CCYY only.  If applicant moves in, it shall be applied to Lease Deposit monies.

I am in no way giving legal advice and the above statement is an example of what could be used.

Quito Keutla · Answer

@Sam LLoyd thanks for posting the question, I've learned something about leasing I hadn't thought before @Nathan G. @Jon Holdman regarding termination clauses.

Anthony Wick · Answer

I've had quite a few people ask for me to hold a place vacant, anywhere from 1-2 months. The answer is always; "No". Why would I hold a place vacant for a full month, let alone two?! That is giving up quite a bit of money. I had a potential great tenant relocating to the area, but I still wouldn't hold the unit empty for a full month when I had at least two other potential tenants that qualified under my guidelines. If I advertise; "available October 1", it always surprises me when people call and ask for December 1.

Nathan Gesner · Answer

@Tim Kaminski I'm not giving them anything free. I'm holding the unit empty until they start renting it.

Tenant applies and is approved on October 1st but doesn't want to move in until November 1st. I tell them I won't hold the property empty for more than two weeks so they will have to start renting it on October 15th. If they agree to that, I take the security deposit immediately and remove the property from the market. Two weeks later, I expect them to pay the remainder of October rent, whether they move in or not. They get access to the unit when they start paying rent, which is October 15th. If they don't want to pay rent early, I leave the property on the market and hope someone else will rent it before November 1st.

I try to ask some "pre-screening" questions when talking to applicants or showing the property. One of those is, "When do you want to move in?" If they don't want to move in for two weeks or more, I explain our policy of not holding the property for more than two weeks.

Tim Kaminski · Answer

@Nathan G.  So in my example above, you would give them 2 weeks free but come Oct. 18th, they would be on the hook for the rest of October rent.  So your lease start date would be Oct. 18th?

Sorry to be specific, just want to make sure I understand fully.  I like the idea of 2 week grace period but nothing more.  The sooner the better.

Nathan Gesner · Answer

@Tim Kaminski that is correct. I see a lot of Landlords make the mistake of holding a property for up to three months for someone, which makes no sense.

You are not obligated to hold the property vacant while waiting for them to start paying rent. I tell applicants that I won't hold the property off the market for more than two weeks. After that, they are expected to start paying rent and utilities even if they won't occupy it for another two months. I may adjust this based on the time of year, demand, or other factors.

It's their choice. They can start paying rent early or they can take their chances it will still be available when they are ready. I'm not giving away the farm when there may be other people interested in renting it sooner.

Tim Kaminski · Answer

So with the Deposit to Hold form:

Say it is Oct. 4th, I have an empty unit, and tenant is approved to lease my unit but they want to start Nov. 1st.  With a deposit to Hold, if they do become my tenant, I don't actually see any of that money.  The money turns into a security deposit, which they would most likely get back at end of lease.  Therefore my October mortgage payment is coming out of my pocket, correct?

I would only be able to get that October mortgage paid by someone other than myself if they decided they didnt want to rent it.  Am I looking at this wrong?  I don't like the fact that I am still on the hook for mortgage payment.

How early do you sign a lease

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