Considering doing longer leases

[Carlo D.]

Are longer leases a good option to consider? If I was considering a 2 or 3 year lease. And maybe offer no increase during that period or maybe a small increase below market rates. Is that a thing? Any disadvantages in doing this? 

[Nathan Gesner]

Quote from @Carlo D.:

Most experienced investors will tell you this is a bad idea. It sounds good on the surface, but reality is different than paper math.

In my experience, most tenants will sign a long lease and then break it. We do one-year leases and I still get dozens of early terminations every year. Tenants are fickle. They move jobs. They change relationships. Most of them can't predict where they will be after one year.

Sticking with a one-year lease keeps you on schedule with rent increases and inspections. If you look back three years, most markets have probably seen rent increases of 20% or more. That's a lot of money you would miss out on with no increases. And what happens when your rent is low? You are more likely to attract low-quality renters who can't afford market rates.