All Forum Posts by: Jacqueline Blue

I would like to see what people think about 9 month leases. Anyone?

@Jacqueline Blue

I have not read all the posts above, but I want to say I would not do a lease for 2yrs for the better qualified prospect tenant.  You can always say thanks but no and ask them full rent and one year lease.  At the end of the lease, renew for one more year and I would negotiate the rent at that time.  Or have a month-to-month lease option after the main term of the lease.  

1) Don't cut yourself short because you are somewhat insecure.  A two year lease does not necessarily means you will have them paying rent for two years.  Read the lease agreement, hopefully prepared by a Broker or an attorney.  

In this market I would be happy to take a tenant who wants a 6 month lease.  It is a sellers market (or landlord market), meaning lack of properties, more people willing to pay more generally speaking.  

2) What if the best qualified tenant defaults or breach the lease?  I could find a new tenant within a week, but now I'm stuck with this 24 month lease making things harder for me.  24 months is somewhat lengthily for a residential property.  

3) Just my personal experience, tenants who moves in from out of state and have great credit scores and very nice jobs wants to buy a house within an average of 8 months once they become familiar with the area.  This means you will have turnover often = vacancy + other most likely expenses. 

For all the reasons mentioned, I would not recommend a two-year lease. If the rental is located in a seasonal leasing cycle and the renter wants to move in December, I might consider a 14-month lease to get this renter through the cold weather season when there is less leasing activity. At that time, you could consider a rent increase and if the tenant moves, you can still increase rent and get the next tenant on a better leasing cycle - starting and ending in the spring is better. 

@Jacqueline Blue With all of the due diligence that I do for each tenant, I would be comfortable and confident with a two year lease. I use turbotenant for marketing and tenant screening purposes. I'm able to run a criminal and credit score check. I do a social media check, a google search, an arrest search, and I call all of their references including their landlords and employers to verify everything. When it comes to tenant screening, it is much better to be safe than sorry. Hope this helps!

If you are not familiar with local laws or how courts are ruling for evictions for money VS possession, term vs month to month in the jurisdiction where this home is you really should do so before signing a 2 year lease.  Precovid we would do them but not at a reduced rate.  Post covid we no longer do them.  In some areas that we have homes in we won't even do year leases, only month to month because of how the courts have changed during covid times.  Some courts it is difficult to evict on a term but easy on month to month.  So to protect ours and our clients downside we stopped doing term leases in those areas.  

 Do not do a two year lease. Let them know you offer lease renewals, so they will have a chance to renew. 

Here are my reasons:

1. People break leases all the time. It is even more common with people relocating to an area. In that situation you have just discounted rent for no reason.

2. Offering a discount for a two year lease hurts you two ways. You take a loss year one, but even bigger loss year two because you have no option for increasing rent.

3. You are stuck with someone for two years. You could end up with a qualified tenant who is high maintenance. They could bring in emotional support animals and you are stuck with pets that you can't charge extra for. One year is tolerable, but two years with a bad tenant at reduced rent is horrible.

New landlords fear vacancy, but you shouldn't. If they want to live someplace two years, they will do it regardless of lease. The time and cost of moving is a big hassle, so that alone is incentive to stay. Some of my longest term tenants are on month-to-month leases. I have had three out of state relocations break 12 month leases - all had excellent credit and claimed they wanted to live there for years.

@Jacqueline Blue

I hope all is well with you. My strategy has been to signed MTM leases with new tenants. This allows both parties to get comfortable with each other. After a six month "trail period", I will go back to them and offer a year lease. Sometimes, I just keep it at MTM, because it allows more flexibility. I can give a 60 day notice to raise rent if I am in a MTM. Signing a two year lease locks you in at a rent rate that will be out of date when the lease is up. This will bring calm, because you won't have to worry about signing a lease; however, it is less money over the long run. I hope this helps from a different point of view. 

If you ever want to chat about RE, please feel free to contact me.

Beleza,

Charles Anthony

Residents will move when they need to move. Long term leases only lock the landlord in. Best thing I've learned in 13 years - M2M rental agreements.  You can deal with misbehaving residents immediately, and they know it. 

@Jacqueline Blue in my experience (hundreds of rentals, 12+ years) tenants will often ask for a two-year lease as a means of enticing you to take their application over others, or to talk you into lowering your standards or rent. I used to allow longer leases, but at least 80% of them left before the full term. Most renters can't say where they'll be in two years. Also, it can make it more difficult to remove them if they are problematic.

Stick with your plan of one year. No discounts. Wait for a well-qualified applicant. Tenants that offer more than you are asking (longer lease, cash in hand, offers to renovate for free, etc.) are all red flags.

I have done 2 year leases.  That usually isn't a make or break thing.