Do term variable rents make sense in house hacking?

Question

Hello, some time ago I posted this question about house hacking a MF home. I have since decided to move forward on a SFR property, where I will be renting out the spare rooms. Wondering what your thoughts are on variable rate rents for this type of market. For example, 1yr: 650/mo, 6mo: 675/mo, month-to-month: 685/mo. Would this discourage tenants looking for a simple, low-cost one room rental?

Would it also make sense to only offer month-to-month after a tenant has signed a 1yr or 6mo lease? Or should it be made available up-front to all new/prospective tenants to attract more interest?My reasoning is that it is preferable to have a stable, long-term tenant. This avoids high turnover and lowers vacancy rate, decreasing cost to screen applicants, show the home, deal with phone calls, and everything that goes into the screening process. Perhaps that is not the right approach for this market? Are most people looking for stability in a roommate type of arrangement or for flexibility as they transition to an apartment or home of their own? Thank you!

Would it also make sense to only offer month-to-month after a tenant has signed a 1yr or 6mo lease? Or should it be made available up-front to all new/prospective tenants to attract more interest?

My reasoning is that it is preferable to have a stable, long-term tenant. This avoids high turnover and lowers vacancy rate, decreasing cost to screen applicants, show the home, deal with phone calls, and everything that goes into the screening process. Perhaps that is not the right approach for this market? Are most people looking for stability in a roommate type of arrangement or for flexibility as they transition to an apartment or home of their own? Thank you!

Thomas S. · Answer

Length of lease statistically has nothing to do with how long a tenant will stay. If they want to leave for what ever reason they will break their lease and if the like the place, assuming life does not force them to move, they will stay regardless of lease term. Room mate situations are transient by nature and can be extremely volatile due to personalities of strangers.

Personally I only use M2M to benefit me and would suggest you do the same and charge $650/month for all.

You want to be able to get rid of bad apples as quickly as possible and this should be more important than worrying about tenant turn over.