I am purchasing a property that is about to close mid to late-November. I will need a couple of weeks to get it rent ready, so it should be good to go by mid-December. I doubt anyone is moving in around Christmas, so lets assume I have a January 1st lease start date. As I understand it, this would be one of the worst dates to have a yearly lease renewal.
Should I suggest a 6 month lease? Of course, I will explain how this is mutually beneficial as they get a short lease as a trial to see if they like the property. Then I will have the renewal July 1st.
(Fun fact: Property is in NJ, so I would want to avoid people moving in the snow)
Has anyone else done this?
We have gone the other way and pushed a 1.5 year lease on a few recent rentals, or whatever the period is to get it into late spring. We avoid potential turn costs for a little longer that way as well. We just closed on one and will be in the same boat again...
I just had one that I pushed to 7 months because I did not want an almost 2 year lease with an unknown tenant. I think it depends on who you are marketing to but I would lean to something like 14- 18 months rather then 6 months. Unless of course you find someone who wants it immediately but prefers to leave at the end of the school year.
@Andy W. and @Colleen F.
Thanks for the feedback. I am going to push for a 1.5 year lease. This would be for a family or young professional commuting to NYC. Not in a college town, so I wouldn't worry about semester change over. I suppose I have never signed a 1.5 year lease, so I wasn't aware how common they were.
I would let them know the rent is "such and such" for a 12 month lease, "or if you are willing to sign for 18 months I can negotiate a slight rent reduction". So if you could rent for 1000/month, tell them the rent is 1100 or 1050 but then let them know with an 18 month lease you'll rent it for 1000. You dont have to make it a reduction that what you wanted, just make up a slightly higher number for the 12 month lease and of course point out the obvious that they will get a premium price and never have to worry about moving in the dead of winter! :)
I just went through this last year and did a 15 month so it ends during the late spring period. Go for the longer lease if you can versus 6 month.
I have done leases for all kinds of different lengths, because I don't want them to end in the winter either. I have someone moving into a rental on November 1st that I just did a 10 month lease with, ending 08/31/15. I just explained to them that I don't want their lease to end in the winter. They were fine with it.
I own rentals in low income areas of NJ, and actually just leased out one of my units with the conclusion of the lease July 1 2015. This way if everyone is happy we will resign a 1 year lease at that time, and I even agreed not to raise rent during that time period. This is a win win, as if either party is unhappy they will have an easier time finding a new place and I will have an easier time finding a new tenant.
I think its a great chance to have a trail period with a tenant. In all honesty most people who are looking for a new rental around the holidays did a poor job planning as kids are in the middle of the school year, ect, which can mean they dont have their finances or other areas of their life in good order.
I have done 18 month leases. I highly recommend not offering discounts and having break leases. I have had at least half of my tenants want to break my lease. Legally if you don't have. Break lease clause there is nothing you can do but charge them if the house doesn't fill and actual damages (time and lower rent in most states don't count).
How about going the other way and also making your life a little easier with not having to renew leases? Do a month to month but put exclusionary months in there. I got this idea from snowbirds in my local real estate group and now use it. I create month to month leases that expire upon a 30 day notice but exclude the months November through February. Then state something like the earliest a 30 day notice can be given for a year is March 1st and the latest a 30 day notice can be given for a year is September 1st. If a notice is not given by September 1st of the year you are required to stay until the exclusionary months are up starting March 1st of the following year. I am writing this kind of fast so you'd want to make it easier to understand in the lease but I think you get my concept.
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