Real Estate Investor · Minneapolis, MN · Member since 2008 · 37 posts · 7 votes
Hi,
This is my first post and I'm looking for opinions/suggestions on going with 1 year lease vs. month-to-month leases for my tenants.
background:
I have two properties in "not great" neighborhoods. In other words, 98% of prospective tenants have some kind of story on how their convictions or UDs were not their fault. Maybe you know what I mean?
Anyhow, I've never had to evict anyone yet, but I'm sure it will happen some day as I'm a buy-and-hold and do the PM myself
.
Until recently I had always assumed 1 year leases were good until my screening company recently suggested a borderline application could be signed up for month-to-month lease. Going with a month-to-month would decrease my risk of having a bad tenant. This way, I can give them 30 days notice to move out rather than go the eviction route if there is trouble.
Your screening company is EXACTLY right. There is absolutely NO ADVANTAGE to giving low income tenants a one year lease. That gives them all the advantage and does absolutely nothing for you. When they violate the one year lease, what are you going to do? Sue them? You can't get blood from a turnip!!!
If it is a bad market and the applicant is "risky" I will only do a month to month -you need to be able to get rid of them--watch out for too many bad stories from an applicant. Joann
Theoretically, it's that easy. Give them the appropriate notice (30 day notice in Ohio) and they move out. Unfortunately, in the real world, they may stop paying rent and refuse to leave, in which case you evict them.
Doesn't Section 8 require a one year lease? I have a tenant on a month to month who gets rental assistance from Social Services. They re-evaluate the tenant's eligibility every 90 days and if they do not renew them, the tenant has to come up with another way to pay. I expect if they can't pay and don't leave voluntarily, they'll have to be evicted.
Keep in mind, tenant can also move out at anytime they want.
Another option is to do short term leases, 3-6 month.
You give them 30 days notice and let the lease expire.