Updated almost 9 years ago on . Most recent reply
Who Benefits Most from the Length of The Lease?
Is a Lease Term Longer than One Year Really Beneficial?
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- Real Estate Broker
- Tampa Bay/St Petersburg, FL
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It depends on the market (increasing versus decreasing rents) and the tenant.
The biggest benefit is usually the decreased vacancy rate. A month of vacancy in most cases wipes out more than a year of rent increases.
For example, if you could raise the rent by $100/mo in year two, but you have a month of vacancy (due to tenant turnover) on a $1200/mo unit, you'd break even at best.
It's often better to keep good tenants in place and avoid vacancy than to chase rent increases with turnover.
That being said, for a brand new tenant who you have no history with, I see little incentive to give them more than a year. However, to keep a great existing tenant in place, it might be worth it.
- Jeff Copeland
