Reducing Tenant Rollover Risk

[Paul De Luca]

Property #1 - duplex

Unit 1: lease is 10/15/20 - 5/31/21 (7 months)

Unit 2: ??

Property #2 - duplex

Unit 1: house hacking 

Garden unit: lease is 12/5/20 - 7/31/21 (8 months)

I just approved a renter for Unit 2 at Property #1, and I'm wondering what you guys think we should make the lease term assuming a 12/5/20 move-in date. The tenant is open to a one-year lease but is also okay with doing a shorter term lease to begin (6-12 months) to have the first lease expire sometime in the Summer 2021. It seems likely the tenant in Unit 1 for Property #1 will not renew because they are planning to either move to some place with more space or potentially buy.

Basically, we want to reduce the tenant rollover risk and odds that two units are vacant at the same time. The two above leases we decided to go relatively short term to test out the relationship with the tenant before signing them to a longer term lease, which we did with the current tenant at Property #1 . Do you think we should do the same thing as we did previously, or do you think we should sign them to a 1 year lease? The latter option may make sense since a lease expiring between Thanksgiving and Christmas/New Years will mean the tenant is less likely to move.