Setting Leases to end in Peak Months?
San Diego · Member since 2021 · 24 posts · 5 votes
Setting Leases to end in Peak Months?
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Quote from @Mike Hsiao:
I have a 4-plex in Normal Heights, and just getting started with managing the property. One of the units leases will be ending at end of September. I believe they want to renew the lease, but I'm thinking of only extending to May 30th 2024, so that it ends at the start of the peak rental months. Even though I don't think September 30th is too bad, my thought is that kids are back in school and it cuts out that pool of renters. Albeit, Normal Heights doesn't have a lot of families. I was planning to do this where I can for each unit moving forward that
I'm sure rental demand and maybe rental pricing drops a little in Nov/Dec/Jan/Feb timeframe, but overall I think this area should fair decently year round. I think...
I'm curious to get thoughts and/or pro's/con's of others that have property somewhat near or around this area in San Diego.
We do what you suggested and it worked great until last year when for some reason I had more turnovers than our usual by far. I was flipping 4 units during the summer and some of them were not easy turns. I had the financial resources to still take the usually family vacations, but at the expense of increased vacancy time.
However, we did not change anything. We looked at it like a freak year. This year we have our first vacancy of the year in Sept (tenants were fighting so we gave both units the opportunity to terminate the lease Sept 1, of course the one with rent significantly below market rent decided to stay and the one near market rent took us up on our offer (we will only be able to raise rent ~$100)).
Also recognize that tenants sometimes break their leases and leave at other than lease end. The LL is obligated to turn the unit and re-rent it in a timely fashion. In my opinion this does not include needing to cancel vacations; judge May have different view. Or you can have issue where you allow tenant to choose to terminate their lease due to various circumstance (such as tenant unhappy or because tenant is pain in the a$$). My point is just because leases terminate in May does not mean that all turnovers will be in May.
Good luck
5 Replies
Quote from @Mike Hsiao:
I have a 4-plex in Normal Heights, and just getting started with managing the property. One of the units leases will be ending at end of September. I believe they want to renew the lease, but I'm thinking of only extending to May 30th 2024, so that it ends at the start of the peak rental months. Even though I don't think September 30th is too bad, my thought is that kids are back in school and it cuts out that pool of renters. Albeit, Normal Heights doesn't have a lot of families. I was planning to do this where I can for each unit moving forward that
I'm sure rental demand and maybe rental pricing drops a little in Nov/Dec/Jan/Feb timeframe, but overall I think this area should fair decently year round. I think...I'm curious to get thoughts and/or pro's/con's of others that have property somewhat near or around this area in San Diego.
We do what you suggested and it worked great until last year when for some reason I had more turnovers than our usual by far. I was flipping 4 units during the summer and some of them were not easy turns. I had the financial resources to still take the usually family vacations, but at the expense of increased vacancy time.
However, we did not change anything. We looked at it like a freak year. This year we have our first vacancy of the year in Sept (tenants were fighting so we gave both units the opportunity to terminate the lease Sept 1, of course the one with rent significantly below market rent decided to stay and the one near market rent took us up on our offer (we will only be able to raise rent ~$100)).
Also recognize that tenants sometimes break their leases and leave at other than lease end. The LL is obligated to turn the unit and re-rent it in a timely fashion. In my opinion this does not include needing to cancel vacations; judge May have different view. Or you can have issue where you allow tenant to choose to terminate their lease due to various circumstance (such as tenant unhappy or because tenant is pain in the a$$). My point is just because leases terminate in May does not mean that all turnovers will be in May.
Good luck
- Honolulu, HI · Member since 2008 · 3k+ posts · 2k+ votes3yAloha,
Definitely not a terrible plan, but I would recommend stretching the term, rather than shortening for renewals. For NEW Tenants, for many years I always offered only six month term initially, with the verbal understanding we really wanted long term Tenants, and, if they were happy, and we were happy at the six month re-inspection, we would renew for a full year at the same initial rate. If either of us was not happy at six months, they would need to vacate.
Also, if these are studio or one bedroom units, school likely is not a factor...but certainly the Holiday Season, mid-October through mid-February/March is, no matter the size of the units. - 3yTravis BohlingBusiness MemberProperty Manager · Gilbert, AZ · Member since 2011 · 65 posts · 78 votes
Your intuition about leasing interest dropping throughout the last quarter of the year is accurate. We see this annually in the Phoenix area and ensure we do not have lease-ending dates during this period. We consider prime leasing season to be Feb-July.
- Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes3y
Quote from @Mike Hsiao:
I know some people put a lot of effort into this. They try to make all leases end May - August so they can hit peak months. The problem is that it takes a lot of effort and doesn't always work. I personally don't think the juice is worth the squeeze but it's a personal decision. Try it and see if it works for you.
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