Hi everyone at BP!
I have been reading many hours of forums and have learned a lot about residential income real estate. Thank you all!
I have 5 units with leases beginning shortly after purchase (Lease start dates of November, September, February, June and April. I would like to know if anyone has thoughts on best month to end 12 month leases. If there is a real benefit, I can begin writing 10 or 14 month lease to get to that best (price and quick fill) time of year. My properties are 1 Duplex and three SFH.
I've had much better response rates during the summer months - typically May to August as this is when most folks are interested in moving in/out of my rentals. It will depend on what type of tenants your properties attract, but assuming your properties are in PA, I can't imagine too many folks wanting to move in the winter!
The *best* lease end month may depend on whether there is something unique about your tenant base. For example, in the specific area where my units are, there are two major med schools nearby. Therefore, there is a significant benefit to having leases start in late spring to match the moving times of new doctors doing their residency and fellowships.
If there are no circumstances that create a perfect lease time, maybe consider staggering your rentals, so you have less chance of multiple simultaneous vacancies. In that case, I would ask what the worse leasing months are (I've often heard the winter months during the holidays) and avoid those.
warmer months are better. Avoid middle of the winter turnovers.
I've had the most success with summer, particularly the month of June. It may be specific to your market as others have mentioned, but in St. Louis, the summer is a great time for both apartment hunters and landlords.
I have had so much success with June this year that I've decided to get all my leases to expire May 31 going forward. So, if a lease expires in October for example, instead of renewing for 12 months, I'll renew through May 31.
When I started out I thought it would be a disaster to have all my leases turn over at the same time but I'm starting to think that the disaster is having to constantly show apartments throughout the year. Hope that's helpful!
It really depends on your clientele ... remember the mantra: real estate is local.
Here we are a university and government town, so leases tend to run May - April, September - August or September - April. When I was in MTL, everyone moves on July 1 - known as "Moving Day".
In our buildings which cater to families, turnover is more prevalent when the kids are out of school (June - August).
If rent to families with children, I'd say summer. People with children do not like to move during the school year.
In my market winter months not bad, but it may take longer to rent. I offer move in special or some incentive if there's an issue with filling vacancy. June-Aug rent faster because of summer break...
I agree with @Michael Seeker ; I never write a 12 month lease that ends in months of September through March. For the leases starting in September through January the duration will be less than 12 months. For leases starting in March the duration will be more than 12 months. For leases starting in February it could go either way, depending on circumstances.
@Robert M. , I see you live in a cold Winter weather state as do I. Assuming your rentals are also in PA I have two very different strategies.
There is one school of thought that states the leases should expire in the Winter. Why? Because there are fewer homes available in the Winter for a tenant to move to and it is more of a pain to move in the Winter. Landlords that choose this strategy report that it is easier to put rent increases through because the tenant would rather stay and pay than move. I was more likely to use this strategy when I wrote an initial two year lease (something I only did for very qualified tenants).
Another school of thought is to only have leases expire in the warm months because it is easier for the landlord to prep and show a house and tenants with kids would prefer to move after the school year ends (and before the next begins) so it is an easier time to find a new tenant. Of course, it is also easier for your tenants to compare rents and move if they find what they perceive as a better deal.
I hated prepping multiple homes at the same time so I always staggered my leases and generally chose the warm weather strategy. Though the Winter strategy was quite successful several times.
You have a good test sample with your leases staggered now. Experiment a bit to find what works best for you. A tenant who is a bit of a pain and might have difficulty paying rent on time (you know, one who you wouldn't be too disappointed if they chose to move out) is a great one to test a significant rent increase with.
@Robert M. it depends on your resident profile and geographical area. If you want a national perspective then I'd say stay away from November and December but, as @jeff says you could use that to your advantage. Apartment Guide.com is a popular website where people search for their new apartments.
The chart below shows you when people are searching and you can see there's a big dip in searches once it gets colder and the holiday season rolls around.
@Michael Siekerka, @Ricky A, @James Wise, @Adrian Allen, @Roy N, @Felicia W, @Rolanda Eldridge, @Steve Babiak, @Jeff Rabinowitz, @Joe Fairless Thanks for all the opinions and
@Joe Fairless especially the the hard data.
Being from Erie, PA where there are sometimes endless winters, I have been planning on managing lease terms to end in early summer (June 1). I have had difficulty showing in January and February due to weather and have had a water freeze disaster (because power went out) in early March this year. Also heating bills in empty units are high in winter. @Joe Fairless data shows Sept, Oct, Nov, Dec to be slower months of demand (interest). My PM received many inquiries this April and into May.
We do have a Medical college in Erie but there is no real special circumstances other than winter and school year that effects peoples desire to move or not. Decades ago in Pittsburgh (I think I remember) May 1 being official moving day for apartments.
( Sooooo....May 31st, June 30th, July 31, seem to be the times I will end all leases.)
Thanks again for the consultations to help me make a decision.
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@Raymond B. Thanks .got it!
Wow, lot's written and I just thought I'd just answer from here.
End of July, school starts in September. Next best is end of April, snow is gone, summer kicks up and folks move. In 2-4 units, I stagger leases so that 2 tenants are never leaving within a month of each other, in other words, one ends in April the other in July. Never had a problem :)
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