How far out to sign a lease

Question

I just picked up (3) BRRRR's in the past 2 months. One is being rented tomorrow (11/28/20), 1 will be ready January 1, and the other February 1. The 2 houses that are still under rehab are already being sought after and potential tenants want to sign leases now so they'll have them locked in. How far out do ya'll generally start signing contracts with tenants? I already had their applications on file from where they applied for another one of my rentals and they both qualify for the homes.

Lynnette E. · Answer

I won't sign them until I am sure the place will be complete on a specific date.  Construction does not go by the schedule I make, and I do not want homeless future tenants.

Reggie Rearden · Answer

@Filipe Pereira, The tenants want to go ahead and give me the deposit upfront. I did explain to them that i could not give them an exact date and there would be a clause in the contract stating that. I'm basically giving them first option and they are willing to sign a contract and give me deposit for holding it.

Tracy Streich · Answer

Agree with the above.   Why put yourself at risk if the remodel gets delayed.   You can tell them they will have first option and the expected completion date.  If it does not work out there will be another renter.

Nathan Gesner · Answer

I agree with Lynette. You have to be careful when under construction because contractors are notorious for running behind schedule.

It's clear the demand is high. In fact, it sounds like you may be renting it a little low if people are willing to wait. I would wait until it's 1-2 weeks from completion and I would add an additional week in as a buffer for any extra work or cleaning.

Wale Lawal · Answer

@Reggie Rearden

2 years max then renew for another 2 years if they are great tenants.

Goodluck 🤝

Filipe Pereira · Answer

@Reggie Rearden

Is there a reason you think there won't be a demand later that is similar to the demand there is now? If the demand is the same, it would make sense to me to wait for any unforeseen circumstances that may pop up between now and then. If you do choose to go ahead and determine who the tenants will be now, make sure you collect as much money now as you can to lock in those tenants.

People often say one thing and do another, unfortunately.

How far out to sign a lease

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