I have a fully remodeled home (was originally intended to be a flip) in my community. I decided since it's the dead of winter, it would be a bad idea to list it - it would likely sit 90-120 days on the market until the "spring thaw," leaving potential buyers thinking "Why has it sat so long? Must be something wrong" and also "120 days? It should be marked down!"
So, I decided what the heck...I'll try renting it for $1000 a mon, no utilities.
For my area, that's very steep (most places are around $600).
I finally have a very promising tenant coming to visit (retired government worker here to help with a trust) and to check it out.
However, they want a 6 month lease.
A definite pro I see is that their lease would expire in June - during peak listing and selling season. A major con of it is that, well, who knows...maybe they aren't a good tenant.
My question - Are there any major things I need to be aware of with a 6 month lease vs a 1 year? I feel like I've read somewhere that 6 months is riskier.
Find out more details from there on why they would like a 6 month lease. First though in my head is red flag but will need more information before checking out. were you proposing a 12 month lease and they responded with 6 months?
How's the airbnb laws and rentals in your area? your best bet may be short term rentals via the airbnb channel is possible.
Given your plan to sell I think renting it for 6 months through the slow season for your area is a good idea. Just make sure to budget some for turnover to get it in good shape again for when you re-list in the summer.
I would think you would be looking for a short term lease (3-6 months) since you said you want to sell it. You will want to do your due diligence on this individual. Many people use cozi (check the forums there's only a thousand posts on due diligence).
If you were keeping it I would stay away from a six month lease (turnover can be a hassle - vacancy, cleaning, maintenance).
Turnover costs can be high; so, many owners like to have residents who stay at least a year or two. If you intend to flip, a shorter lease may be perfect.
A unit renting for $1000 a month in an area that rents for $600 a month does not make sense...for the resident (and maybe the owner if they are unqualified).
Originally posted by @Lucas A Davidson :
My question - Are there any major things I need to be aware of with a 6 month lease vs a 1 year? I feel like I've read somewhere that 6 months is riskier
Do it. There's nothing about a six-month that makes it riskier than a one-year, except for the timing of termination. In this case, a 6-month helps you because he'll end in the peak season when it's easier to find a one-year tenant and get back on a summer cycle.
All my rentals are one-year leases but I make exceptions if the market is really slow or the tenant is willing to pay more. I often get a 25% increase for a month-to-month lease. In the winter, a 6-month is better than sitting on a vacancy.
Bad idea. If the house is in great condition, ready to put on the market, then putting a short-term tenant in it is a lot of risk (of damage) for a little money. Plus, June is not peak selling season - June is late. Peak selling season would mean putting it on in March - the closings happen in June. However, if you have a truly excellent single older adult, non-smoker, no pets, coming with little to no furniture, and he will be the only occupant, giving you a honking big damage deposit, plus he doesn't mind that you're gonna have it on the market while he's there, with showings, you might consider it. My rule of thumb for six month rentals is 150% of the going monthly rent on one year term leases.
I’m from a harsh winter area. You’re wise to consider the season for listing & Moving when deciding on lease term. I don’t have them end Oct - Feb inclusive.
I don't see anything wrong with it since you just need to rent it to get you by until the summer. If you were planning to keep it 6 months might be a little short to want to bother with. In this case, since it carries you right into prime selling season, I think it's a great idea. If you were to get a year lease you'd have this same issue again next year with the timing of the listing.