How long is your SFH lease? Am I overthinking this?

25 Replies

Thanks to all the wonderful advice I have found by lurking around on BP for the last few months we are now under contract for our first rental property! It's a 3/1 SFH and we should be closing within the next 2 weeks.

Now I am working on a tenant package starting with the lease and after reviewing forms on BP, reading forums and going through forms I have from my work as a legal VA I may be over thinking this. Working in the legal field I see liability everywhere. Of course, I will have the documents reviewed by a local attorney, but was wondering how long is your typical lease?

My first draft was 12 pages which seems ridiculous for a residential lease. I now have it down to 7 pages. I have friends who are renters who say their leases are 1-2 pages long and I don't see how you can possible cover everything in 2 pages (my list of tenant rules and responsiblities is almost a whole page).

So, how long are your leases? Any suggestions? I appreciate any advice you may have.

All my leases are for one year because expenses can change. I don't want to be locked into a rate for longer. Every year I can offer a renewal and increase the rent. I don't think its ever a good idea not to raise the rent even if its a miniscule amount. If your tenants expect to pay the same amount each year when to you to actually raise it they can take offense in a big way. At least that's what I've found. They will not appreciate you eating the additional costs of having the property (with both tax and insurance rates going up). So increase every year even if its only $10 a month.

As for your trying to get your lease down in pages I wouldn't. Make the barriers to entry high. This helps weed out the lesser desirable tenants. A tenant with higher responsibility will understand and respect your lease. At least that's what I've found to happen. Mine, including supporting paperwork can be around 20 pages.

Thanks Darren, I had not thought about raising the rent every year and I'm glad to know that my 7 page lease is not unreasonable.

LOL, I began reading thinking to tell you a lease is usually done on an annual basis.

My "standard" lease is 4 1/2 pages, my multi is 7 pages, both 10pt type size, half the last page is for execution by the parties and guarantors if any. Leases will be rather property specific, by tri-plex I believe is about 9/10 as it allows sub-leasing arrangements for college students.

Your state requirements need to be addressed.

I also have an addendum attached that describes examples of activities that may become necessary that are unforeseen at the time of making the lease which may require additional administrative functions that cause additional charges to be assessed that become a part of rents then due. It's a method to fine a tenant for failure to perform duties required or meeting covenants made. ie. not returning trash carts, allowing inoperable machinery to be kept on premises, having to address police calls, etc. It was approved under economic development requirements/directives under HUD. :)

@Mary Olivent my lease is 4 pages long. My state however is very landlord friendly. I also have an application form they must fill out before I will consider them to rent from me. Depending on the age of your house you might need a lead paint disclosure/warning pamphlet also.

Our rental agreements are 4 pages long but there are addendums for every possible scenario. Our forms are produced by a group of landlords and attorneys that all sit at a table and struggle with (attorneys try to make long) trying to include what's necessary (landlords want understandable and shorter) and do a good job. The forms are sold through "Rental Housing Alliance" a local RE investing group.

I would recommend using a real estate association's forms as they will have seen more as a large group then you yourself trying to figure all the angles.

Our group closely follows the legislature changes and immediately adjusts the forms to comply with the most current laws. It is land-lording for dummies, just fill in the blanks and you can't go wrong.

We also have an extensive form for listing criteria to help you avoid discrimination, the biggest threat today to our financial well-being.

Okay, I can't get the @ feature to work on my browser (Firefox) or maybe I'm not doing it right. Anyway...

Thanks Bill and Jerry for your advice.

Bill you are correct, I didn't think of how the subject would look to someone else when I posted it and I'll go read the HUD regs, I just waded through the Tennessee Code to make sure we were compliant.

Jerry, our house was built in 1979 so we just missed the lead paint issue. I started with the lease (I always tend to work backwards) and will be working on the application next so you may be hearing from me again.

Thanks again for your help.

@Mary Olivent the easiest way to use the @ feature is to type @? then choose the name from the list that pops up below this box.

My lease is five pages, though one is mostly just signatures. Plus one page about the security deposit.

My leases are month to month. A longer lease is more binding on the landlord than the tenant. If tenants need to leave, they will, lease or not. And rarely do you have much ability to collect something from them if they do. A month to month lease lets you terminate the lease for any reason. If they refuse to leave, evicting for refusing to leave after the lease was terminated is easier than, say, an unauthroized pet or noisey parties.

Thanks Jeff, I'll check out our local real estate association. Working for lawyers I tend to take their route of overkill which is why I'm always afraid I'm overdoing it. I don't want to run off good potential tenants by throwing a huge overbearing lease at them.

@Jon Holdman Thanks Jon! I wasn't doing the "?" after the "@".

Do you have a lot of turnover doing month to month? We are in a huge summer tourist area with attractions like Dollywood and the Smoky Mountain National Park so there are a lot of transient employees that come just for the summer. I'm hoping to find a family that lives and works here full time. I don't want to end up renting the house during the summer and it sitting empty all winter.

...and now that I figured it out. Thanks again to @Bill Gulley @Darren Sager

@Jeff S. and @Jerry W. for your advice.

I only have two rentals at present. I've had much less turnover since switching to month to month, though I don't think the lease term is a factor. My current tenants have been there two and 2.5 years. I had two different tenants on year long leases just bug out. I did have one month to month tenant who left after about seven months. She was a perfect example of someone who would have left anyway. Boyfriend issues, then wanting to move to LA to be with family. With the month to month it was an amicable, scheduled parting. And she got back most of her deposit. With a long lease she would have been another bug out.

Thanks Jon. I had not even considered month to month before now. It's definitely something to consider.

Month to month can have advantages, marketing for one thing, but the draw back here is that MTM notice must be given on the 1st of the month giving 30 days notice. A lease can be terminated anytime upon default 30 days. So, if something happens on the 10th, MTM you wait 21 days to get to the 1st, then 30, then 10 to 15 days to get the eviction. A lease can be terminated on the 10th, out date is the 10th of next month, 10 to 15 days to evict. 45 days they are out with a lease vs. 61 to 66 days in this example with a MTM. I'd rather have to 20 days of possession than having them feel less constrained as I can tell them not to let the door hit them on the way out, either way you likely be out the future rent from them, taking possession quicker can mean a quicker occupancy. :)

@Mary Olivent , I totally agree with your dilemma. My leases are 5-6 pages at 10pt, about 40 numbered paragraphs. Your lawyer would have you cover every conceivable circumstance with dozens of pages. The generic 1-2 page leases only cover the basics. I suggest you find a compromise in-between that you are comfortable with. I've actually shortened my leases over the years as I have become more comfortable being a landlord and decided that some things were so unlikely that I didn't need them. That might bite me one day if I end up in litigation with a tenant, but I'd rather have a lease simple enough that tenants can actually read and understand it. The longer the lease, the less likely tenants will actually absorb everything they are agreeing to.

Regarding lease term, I generally require one year minimum because I want longer-term stable tenants and minimal turnover. Turnover repairs and vacancies are the bane of SFR landlords. My lease automatically converts to a month-to-month tenancy after the one year period, that can be terminated by either party with 30 days notice. Most of my tenants end up staying much longer, like 5 years or more.

Give me a shout if you ever want to discuss anything REI related in our area!

My lease is roughly 7-8 pages long. I can have an extra page for a pet ammendment. They also get a check-in inspection sheet which is two pages. I imagine it will only grow as I am changing or updating things regularly. I use it as an education opportunity for my tenants. They might never get to have these things explained to them again and it is a good opportunity to display your understanding of the law so they have that in the back of their mind down the road as well..

@John M. Thanks for your advice. Nice to find someone here from our region. The house we are purchasing is in Pigeon Forge so I am really hoping to find good long term tenants as opposed to the seasonal employees that only work the summer months. I hope we have your kind of luck with tenants that stay 5 years!

@Kyle Hipp Thanks for your advice. Its nice to know I am on the right track. I hope I have the kind of luck with our house as the people here on BP seem to have. If this one works we will be looking for the next investment soon.

We use month-to-month rental agreements on all of our properties. However, we do a 12-month lease for Section 8 for the first year per their requirement, then we change to MTM after that.

Our core rental agreement is 7 pages. Then we add an addendum for other things.... such as 8 pages property rules, 2 pages property condition report (move-in inspection list), 1 page mold/moisture information & disclosure, 1 page lead based paint information & disclosure, 1 page no-smoking policy, 1 page pet agreement, 1 page service animal agreement, 1 page "other", etc.

I schedule 2 hours with new tenants for the move-in. I need that much time to thoroughly discuss the rental agreement, do the move-in inspection, demonstrate how to properly use & care for appliances and other property features, call the utility companies together to change utilities into their name, and present them with their move-in gifts (choice cleaning products, cutting board, hand soap, paper towels, toilet paper).

Since I do a thorough tenant screening. Tenants who are patient enough for our screening process tend to be patient enough for our move-in process. Just keep it going!

I also loan the tenant the following for move-in day: drop cloth floor runners (to protect our floors), moving blankets, furniture carry straps, furniture floor sliders. I also loan them a small bucket for a month that has "approved hanging devices" (picture hooks) and a small hammer for hanging pictures (on drywall walls only) and that's when I emphasize the part about what they can and can't do to the property. We have strict rules about property modifications.

Plan to follow up with your new tenant at one week, at one month, and for periodic inspections thereafter. Hope this helps!

@Marcia Maynard Thanks for the great advice. I hope that by the time we get the house closed, updated and ready to rent that I am as organized as you.

@Mary Olivent - I have a two page basic lease now, and then some additional pages that supplement it with "house rules" or local pages about smoke detectors, etc.

For a lease term, I'd suggest at least a one year lease to start - could convert it to month to month after that, but at least you get someone in for a year. The only reason I have gone over a year is to get a lease into a normal cycle (ie: purchase a property that has a lease that expires in December, do a 18 month lease to get it to expire in June). I'd agree with others that month to month you tend to see tenants stay longer just because month-to-month are hard to find in many areas so it's a great feature you can offer.

@Mary Olivent unless you have a lot of rentals, making your own customized lease document is probably not cost effective. Lease agreement doc is not the only doc you need. You also need addendums (pet, guest, house rules, ...). Then eventually you need non-compliant notice, pay-or-quit notice, etc etc. Every doc and every time that needs lawyer review will cost you $$. I am subscribing to on-line doc website that has all kind of templates that are customized for my state. Looks professional and easy to use. I can put together a lease and print it out in 10 min.

In terms of length of the lease, I have max 6-month for my multi and one year for SFR. For multi-family, if the applicant is good enough, but not EXACTLY what I am looking for, then the lease term is month-to-month.

I use the standard California Association of REALTORS package, which is 6 pages plus another 2 pages for lead paint, smoke detector, carbon monoxide detector and water heater disclosures. I also have one page of "House Rules" that include: don't make noise/smells that bother neighbors, only currently registered vehicles may park on the property, no car repair may be performed on the property, no smoking in bed, no illegal activity, outdoor cookers must be used more than 10 feet from any structure, etc. etc. etc. About 11 or 12 pages total, but the subject matter is more important than the page count. I'd rather have a 20 page lease in 12 point font that covers all the bases cleanly than a 6 page lease with fine print that will most likely not be read and creates a lot of risk.

@John K. Thanks for the great advice. I had not thought about adjusting the length of the lease so that it ends at a better time of the year.

I should have mentioned that, like others, I several other documents in addition to the lease, such as the move in/out inspection checklist, and a full page move-out addendum that explains in detail what I expect from them when they move out in regards to condition, cleanliness, obligations, etc. in order for them to get a full refund of their deposit. Much better to make this clear at the start!

Unlike others, many of the things people have mentioned having an addendum for I choose to include right in my lease, like guest policy, smoking, pets, smoke detectors, etc. Also, contrary to what Yiv L. said, I don't feel the need to have an attorney review everything I say or change. Many of the docs you may need such as eviction notices, pay-or-quit, etc. are available online for free.

My rentals are not here in our area, they are all out of state, at places I lived before moving here -- which is a whole different topic of discussion. I do think Sevier county has good opportunities, though.

The reason I never start off with a MTM lease is the hassle and expense that go along with tenant turnover. You have advertising costs, a period of vacancy, cleaning/repairs (I always rent my houses in spotless condition and good state of repair. That's a little different strategy than many landlords, but I believe it pays dividends down the road.), and the hassle of screening, educating, and signing up a new tenant. In short, it's not worth it to me if the tenant isn't going to be around for at least a year.

@Yiv L. @John Souerbry Yiv and John, thanks for your input. Much food for thought here. I will look into an online doc service and also I'll see what kind of forms my realtor can provide me with from the Realtors Association.

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here