best month to renew a lease?

Question

We have inherited 2 tenants with the property we are closing on today. I top unit just extended their lease for 6 months, the bottom unit needs a new lease and is currently month to month. I hope to get their leases aligned so they renew at the same time. When do you find is the best time of the year to renew a lease?

I would guess it is May-June as college kids are graduating college and need a place to live. My wife thinks it would be better in July-Aug to possibly sign Washington University students.

I would guess it is May-June as college kids are graduating college and need a place to live.  My wife thinks it would be better in July-Aug to possibly sign Washington University students.

George Moehlenhoff · Answer

Great post!  My current tenants are out Jan 15th, and I'm a little nervous.  Oh well, there has to be someone looking in Holly Hills in Jan right???? Positive thinking.

Thomas S. · Answer

The easiest method is to have all tenants on a automatic renewing M2M. All you then have to do is send out rent increase notices and non renew notices. Piece of cake.

Kyle Eckert · Answer

@Mackal Smith The motivation behind aligning the leases had a few reasons:

1. If I had to pay someone to do something, I could bring them out once for both units.

2. If I signed a 1 year lease with both units, I wouldnt need to do any paperwork for the rest of the year.

Thanks for the input from everyone.  I ended up getting the bottom unit on a 6 month lease, ending March 1st and the top unit is leased unit January.  They will go month to month until May/June.  I will stagger them by 1 month to try to get the best of both worlds.

Peter MacKercher · Answer

From what we've seen you're going to be OK if you're getting the vacancy during the warm months, more or less. Fall/winter and the main holiday season are rough. Everything has some cycle, however, so there can be peaks and valleys even during the "good" months. There are also exceptions when you'll snag a great tenant during an off month.

Kole K. · Answer

I have seen high demand for my rentals in the early summer months compared to winter months.

Kyle Eckert · Answer

@Kathy Henley The deal we got isn't a homerun, but it should have a fairly good cashflow even without adjusting the rents to market.

The units are in fair shape.  We are hoping the building will save up for its own repairs and updates as we move forward.

We are going to retain the current tenants at least until next summer, then slowly start increasing rent until they leave.  We can easily get another $100 from each unit per month, but I like the slow and steady approach of increasing it.

Mackal Smith · Answer

Any summer months are good. September is about the latest you would want to go and definitely avoid Oct, Nov, Dec, and January. What is your thinking with aligning the leases? To me it is best to stagger them. The problem with aligning them is that you have twice the make ready work to get done if they both leave at the same time. Also, if they are not aligned you basically have one paying the mortgage, insurance, etc while you fill the other side...

Kathy Henley · Answer

@Kyle Eckert Hey Kyle, The Washington University area is tops!  There is a Whole Foods in the area, that says something. I hope you got a good deal.

I don't know the best, only know that Thanksgiving through the new year is slow.  I don't mind the renewal dates being staggered because then one tenant is covering the mortgage, taxes, and insurance, at least. What condition are the units?  If new water lines and drains are in the budget, for example, it is best to do both units at once. If refreshing the unit and increasing the rent is going to happen, might as well give notice and start on the first unit.