I'm currently in the process of obtaining a HELOC on my primary residence that I plan to use to BRRRR. Assuming it takes 30 days to close on the HELOC, and another unknown amount of days to find a deal, get it under contract, rehab it, and rent out, this could put me into late 2019 to place a tenant. I know that the ideal lease cycle is in the spring/summer months, and I'd like to find a quality tenant to get on a 12 month lease. Curious as to how other BP members do this. I appreciate any advice. Thanks in advance!
I would not try an market to a tenant until you have it rehabbed and it is ready to rent. Most people are not looking that far out for a rental and many may not have the vision of what the place will look like until after the rehab is done.
Some of my biggest mistakes and stress points were marketing someplace to rent before it is ready. Then you are rushing to to meet a deadline and things just come up. You want to do things correctly and not be rushed to cut corners.
I structure the lease the same as I would in peak months. I hold rents to around the same price point as well and just expect occupying them to take a little longer - just need to hold out. Try to avoid listing in November and December for obvious reasons.
@John Underwood makes a good point about not listing the property prematurely.
Thanks for the advice @John Underwood . I wasn't planning on listing the property until rent-ready. @Michael Craig I guess my question would be, if I had to list the property in November/December, what's the best way to structure the lease to get it back on a spring/summer cycle? Do you lease month to month, 6 months, etc?
I rented out a new purchase in February. I had them sign a lease to the next June. Assuming you don’t want MTM, you can either do a short lease to start to get to the summer, and 1 year after that, or you can go first lease about 15-16 months.
@Anthony Wick thanks for the insight!
We ONLY do month-to-month & even up here with 5inches of snow we have never had a problem renting &/oir showing. In fact we sold a flip last Dec & they moved in while it was snowing. Biggest issue is the school enrollment period, if the tenant(s) have school aged kids.
I'm doing a heloc too and planned to get my tenant once house and everything is done. Like John said no stress no pressure to get everything done.
It has to be mentioned that it really does matter where in the country you are. Somebody mentioned "even with 5 inches of snow" they go MTM. Well, no offense, but for 5 inches of snow we may not even break out the winter boots and coat. From January 7 to February 11 this year we had 38" of snow and broke a 107 year old record. And I had two vacant units (purchased empty in December 2018). Not many people interested in moving in record cold and snow. MTM would be great, but just not here. That's where I mentioned I had the new tenants sign a lease to May 31, 2020 when they moved in.
Buy in a good location and cycle your leases to renew in the spring/summer (the first lease term may be shorter or longer than 1 year).
Make it a little longer or shorter. I prefer longer. Even extending end date to March will help. Most people don't care about a couple of months longer. Also if you have a family with kids they like the end of school year cycle.