Landlord Hack #2 of 10 - Automatic Lease Renewals

First of all my apologies for the loose use of the word hack. According to Urban Dictionary Hack means (among other things) "a clever solution to a tricky problem" for example to hack is to mod or change something in an extraordinary way. That is the nature of my use of the term. 

Anyway my attempt is to keep these short and sweet. Last time I went longer than I intended but the topic took a bit of explaining. This time short is the byword.

I use annual leases. They work great for my typical tenant. Some classes of tenants are better served by month to month agreements so if you fit that bill this won't help much but I really like it for annual or fixed term leases.

Automatic lease renewals reduce turnover and allow for better management of my life and my properties profitability.

All of my leases automatically renew for another 12 month period. The lease specifically states that if the tenant does not wish to automatically renew they must provide about 40 days notice. Notice must be received by the 20th of the month preceding the last month of tenancy. For example, if the lease expires the end of December then notice must be received the 20th of Nov. If no notice comes from me or the tenant, then it renews for another 12 month period. This avoids having to redo the lease every year as well. I can still redo the lease if I've beefed up some clauses or clarified some issues but I usually don't do that. I don't rock the boat.

This is far superior to the common practice of allowing the lease to roll over to a month to month if you don't write a new lease. It puts me in more control of my vacancies. For example there is a very important date to me around June 1 (my anniversary) of every year. I schedule my leases so that no leases end at the end of May or June. End of May would mean I have a move-out around June 1 and end of  June would mean if I could be out of town the two weekends around June 1 and I would miss the best showing opportunities for the upcoming vacancy. Without leases it's my guess that about 50% of my units could easily move one of those two months, making my life miserable. I also use leases to discourage turnovers in Nov, Dec and Jan. Nothing worse than trying to meet all my holiday obligations while showing or turning a unit.

In addition, tenant's lives are often tumultuous, so when they get a new GF of BF on the other side of town and want to move in with them, I'm not the landlord with the vacancy. They have a year lease with me and the other's LL has a month to month. Who do you think gets the new couple? Someone changes jobs and the new job is on the other side of town. The knee jerk reaction is to move closer to work. My lease holds them past that period of change and I've often found they end up staying for another year as well.

Take control of your rental schedules by using automatic 12 month renewals. If you are starting out at a bad time, take control and set you lease end date for a time that works better for you and then use automatic renewals to control the future. Automatic renewals helps you manage rentals and life for greater profitability.

Do you agree or disagree? Let me know below. 

Any cleaver suggestions or practices to amp up your management, add them below.