being a landlord

10 Replies

Do landlords find it better to have tenants at will or to do yearly/6month leases. Whatare so of the negatives and positives of each

I prefer yearly. 6 months is too short because turnover is one of the biggest inevitable expenses you will have and you want to do that as little as possible. Anything longer than 12 months and you lose your chance to increase rent every year.

I've seen many people prefer longer leases and make it work. If you can sign someone for 5 years you should if your priority is not having to deal with turnover. I personally like the option to increase rent every year but every year I lean more towards signing a longer lease.

Another thing I will throw in is I've done weird lease lengths like 10 months and 8 months. The point for this is you don't want to end your leases at a bad time during the year. If you end December 1st, you could have a hard time finding renters because no one likes to move during the holidays. When I took over my property everyone was month to month and I strategically timed the leases to end February-April. I think this is the best time to do move in and move outs.

Staggering the leases is also nice. A completely vacant apartment building is a bad idea for many reasons. Best to have them leave one at a time of they have to leave.

Hope this helps.

That is different for each person.  I like year leases, but some folks prefer month to month.  The thing I like about year long or longer leases are that I know when the apartment will come empty and can have it be during the best time to rent.  it reduces turnover of someone only staying only a few weeks and then having to get it ready for new renters.  The good thing about month to month is that you can get rid of a problem tenant quickly. It is not always lease violations that make you want a tenant out.  One tenant complained constantly.  I got a call there was a gas leak.  The tenant called at 11:00 at night.  I responded because I didn't want my meter locked out until a full check was done as it was an apartment building.  The problem was her cleaning lady put the old cat litter in her garbage can, that is what she was smelling.  You get the idea?  The reality is tenants can move out when they want to and you cannot stop them and t is rarely worth it to hire an attorney to chase them down to try to try to get damages.  I think a lease is a big deterrent to moving out in the middle of a lease, but other landlords may have a different experience.  Hope that helps.

I dislike yearly as it gives too much power to the tenant. Month/month is too short and you're into a motel business.  Therefore, I've opted for 3 months with hold over reverting to m/m. If the tenant can't play nice with the neighbors (and this happens), I can send a Non-Renewal Notice in 30 days and be done with it.

History has shown for me, that I get long term tenants.

All my tenants are M2M, all the rights and privileges are the same for tenant and landlord. Tenants leave when even they choose regardless of the length of the lease so having a long lease makes no difference. Notice to leave is the same either way. 

I learned that for the place I managed (26 unit apt building) in Silicon Valley, CA, that month-to-month worked best for us in the building we had.  It had mainly very small studios and a few large studios and only 5 1-bedroom apts.  So, the quarters were tight. If a tenant was noisy or had friends taking up all the parking spaces, or they were smoking in the apt, etc., it would affect other tenants, and we didn't want to lose good tenants.

If we ended up with a problem tenant, we could just give them 30 days notice to leave (60 days, if they're been there over a year in CA).  

Also, if a tenant wants to leave, in CA they are allowed to break their lease anyway, and landlords can only charge them rent until they find a new tenant (landlords must mitigate damages).  Most tenants don't know that, and what they'll do, though, is start manufacturing habitability problems so they can break a lease.  It's just so much easier to let a tenant out of their lease if they really want to go.

One thing we did for some tenants who were afraid of signing a M2M agreement, because they were afraid we'd raise the rent, is I'd write the contract to say that if they were a tenant in good standing, that the rent wouldn't be raised for 12 months.  So, they would have the stability of a rent that wouldn't increase, they could just give 30 days notice, but we also could get rid of them, if they became a problem.

One reason it might have worked for us where we were, is because the winters are not severe in the SF Bay Area.  So, it's not impossible to move during winter.  Also, the demand was good enough year-round, that filling vacancies wasn't normally a problem.

Originally posted by @Roger Vi :

Anything longer than 12 months and you lose your chance to increase rent every year.

It is quite normal to include a yearly rent increase into a multi year lease.

Originally posted by @Thomas S. :

Tenants leave when even they choose regardless of the length of the lease so having a long lease makes no difference. Notice to leave is the same either way. 

 It doesn't matter how many times you keep repeating this, you will keep being wrong every time.

If a tenant leaves during their lease, then they owe you rent until you find a new tenant. It's also quite easy to sue them, and does not require an attorney or much money as said above. Most tenants will simply understand bad things will happen if they break a lease and not try it in the first place.

Another thing to consider is that drug dealers and prostitutes look for month to month rentals. Often high end properties as these are less suspicious. You might think you can screen for this, but you can't.

@Account Closed That's good to know, I've never heard of it. Main reason I don't do 13+ month leases in WA state is because they require a notary. With a yearly rent increase pre-scheduled that notary may be worth it.

what is the best advice you would give to a first time landlord

Create Lasting Wealth Through Real Estate

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

Start here