I was wondering if there is any disadvantage to having an 11-month lease, instead of a 12-month lease. I had the perfect lease start time and end time but I let my renters do an extra month at the end of their lease (after staying for two years) and I feel that an end date of end of September is better than an end of October, in terms of catching college students, etc.
What do you think?
Hi @Maria G. ,
I agree. I am not familiar with Elk Grove, but typically you want to sign leases as a landlord in the 'hot' months, from April - October and to avoid signing leases in the winter months, from November - March. Ending a lease in the winter months is terrible as a landlord because market rent at that time is typically lower and you'll lose a lot for the entirety of the lease.
In Manhattan, New York, where I currently am, rental prices are about 15-20% cheaper in the winter months. If any lease does start in a winter month, it is in the landlord's best interest to have a 16 month or 18 month lease (any lease term that will get them back on the normal cycle).
The perfect lease is M2M. Tenants never honour a lease when they need to move and M2M allows you control over your property. M2M also solves the problem of having winter and summer rates. You adjust the rent when ever you choose.
A lease has no bearing on how long tenants stay but may prompt them to leave.
IN Elk Grove CA, the weather isn't going to play a role like other areas of the country....
But if your target is college students, you need to have it start and end when that yearly turnover tends to be based on semester/quarters etc. So if you prefer "long" leases", then I would just make the next one end whenever that "target time" is and explain that to the next tenant...if they are a college student, they are going to prefer it end when their college classes end anyway
Your other options....and my preference for ALL my leases...month to month....... long lease protect the tenant....short leases protect the landlord. You can easily say "get out" with much shorter notice and way easier to evict when you get a bad one. Tenants will leave when they want to leave. Long lease may make you feel "warm and fuzzy" that the $$ is solid...but it isn't near as solid as you think...people will leave and its really hard to get the $$ once they do.
I would offer future tennats 11 or 23 month lease. I was going to say maybe even 11 and 21 month option to give yourself some wiggle room. But I changed my opinion. I hate vacancy and turnover. If you think 11 months will crush you at non-renewal, go straight to the 22 or 23 month lease depending on when you want it come empty. I don’t want a tenant that knows they don’t want to stay more than a year. At renewal I offer 2 years at market minus $25-50/mo and 1 year at market. MTM is market plus $50/mo.
Imagine an income statement with 1 tenant for 4 years versus 4 x 1 year Tennants and you’ll figure how far ahead you’d be with 1 solid tenant. (Commissions, advertising, vacancy, make ready, utilities, etc, etc...)
Interesting to see the different perspectives, thank you.
In my particular situation, I will then try to push for an 11 or 22/23 month lease. The "market +/-$" depending on lease duration sounds like a good idea. I'll see if I can get it.
I often adjust the length of a lease to ensure turnover or renewal during the "hot" season, which is May - August for me.