Over rent offer (1 yr) or multi-year (at ask)?

Question

I need some help! I have a LTR that i received two very strong, equal applications. One is for three years at my rental asking price. The other is for only one year and they escalated over my asking price. I’m think of limiting my vacancies and unknowns with the longer term option, but curious everyone’s take here.

Joshua Janus · Answer

I wouldn't want to lock up a rental rate for more than a year and especially in this market climate. In my market of Columbus alone, rent rates have rose over 10 percent over the last year and missing out on that necessary spike with the increased price in property value would be unfavorable.

Kishore Babu · Answer

@Melissa Aughavin, I would prefer one year lease if I don't know them earlier. I usually ask our tenants for two months notice period to avoid vacancies.

Andrew Frowiss · Answer

Just my thoughts on the situation. I would prefer the applicant with a longer Lease term. If you can hold off on a makeready for another year will you make or lose money compared to the extra rent you would get with the other Tenants? What's more expensive?

That's how I try and approach these situations.

Alan Grobmeier · Answer

@Melissa Aughavin, you realize that $hit happens, right?  I would NEVER write a 3 year deal on day one.  Too many things can go wrong here.  What happens if they call you EVERY week for something?  EEK!

Take the best applicant for ONE year.  If you want them for 2 additional years AFTER you've had some experience with them, that's great.  Raise the rents on the 2 year deal.

Melissa Aughavin · Answer

Thank you everyone!! Greatly appreciate your insight. I’m going with the one versus three year lease.

Bjorn Ahlblad · Answer

I’d do the one year.  Longer term leases are not in LL favor.

Austin McClain · Answer

For me, it depends on the market you're in. If you're in a market that is appreciating quickly, take the shorter lease to have the flexibility to raise rents next year. If it's a pretty stable market, then I'd take the 3-year lease to avoid any vacancy.

Steve Vaughan · Answer

Good choice.

In addition, in some stats like mine (WA) any agreement greater than 12 months needs to be notarized.

I think there are a lot of people out there with invalid multi-year agreements.

Theresa Harris · Answer

How long did each applicant live in the previous home?  I'd never do a multiyear without having an increase in rent.

Over rent offer (1 yr) or multi-year (at ask)?

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