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Question

Happy Holidays from Texas!

New house, totally remodeled, potential tenant is asking for 6 month lease, with month to month after lease ends.  I prefer 1,2,or 3 year lease.

a) Should I charge more for a shorter lease?

b)Is that common and legal?  b2) If so, how could I determine how much more?

The area has rents are all over the place, so hard to determine.

Can I require them to have renter's insurance?  They have a dog and want to make sure I am covered.

Thanks

Cody L. · Answer

Why would it be illegal?  Or maybe I'm so used to freedom of a red state that I find these questions puzzling.  We publish our rates and have the following increases for most apartments:6 month = +$75

3 month = +$125

month to month = +$250

Reason being is there is a true cost to a new lease.  Make ready, commissions, downtown, etc.  IF someone has a shorter lease, that's less months to divide up that cost.  Plus, a 1 year lease person might stay for a very long time.  Where as if someone asks for 6 months they are likely looking to move in 6 month.  So a "1 year" might really be way more than just 2x the time of 6 month.

If you're going to accept shorter term leases, CHARGE UP FOR THEM

Andrew Pennick · Answer

@Luke H. It's Is legal to charge a premium for shorter leases as long as you charge all your tenants the same premium we did it religiousy near Houston Texas med center it was an extra 150 per month same for the mtm except the unit would go to market rent plus 150 if we gave them concessions for the original lease

Bill B. · Answer

I charge market for 2 year leases, plus $25/mo for 1 year and plus $50/mo for month to month, I don’t want the turn over. If you don’t know you want to be there for 2 years I don’t want you.

I’d charge at least an extra $25/mo now and $25/mo more when it goes to month to month or a flat $50/mo extra starting day 1. Maybe a larger security deposit as you’re going to split the wear and tear over a shorter period.

Cody L. · Answer

So I just assume it’s legal. I often run my biz based on what I think is right and wrong. There are plenty of legal things I don’t do because they just don’t seem right to me. On the flip side I might do things that are not to the letter of the law but I don’t find anything morally objectionable

not a good way to run a biz but being honest here.

Luke H. · Answer

@Cody L., thanks for responding. I ask about it being legal because of my other questions on pets versus service dogs, being able to charge more and etc.. It seems like it is getting 'crazy' for landlords and as a DIY I'd rather ask dumb questions than find out the hard way.

=)

Jerel Ehlert · Answer

"Market" forces will set prices for shorter term rentals.

The general theory is that you charge more for shorter leases to account for more vacancy loss over an average 1-year period.

Getting a larger security deposit is a bogus practice and the market won't sustain it with an informed pool of tenants.  There is actually less "wear and tear" (which is the SOLE function of a security deposit), so equal or less security deposit is needed.  Unused deposit must be returned to the tenant.  In Texas, the statutory penalty for wrongfully withholding a security deposit is 3x the amount + attorney's fees.  Not waivable.

Luke H. · Answer

@Bill Brandt and @Andrew Pennick  thank you both for your responses. These tenants are building a house so need a short term. Just wanted to make sure I can tell them that and yes, I would do it for all tenants that ask for a shorter lease.

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