OfflineYou pay $20,000 for a car and would not dream of giving someone near total control of when you can use or sell your auto. You would not let any one control your things and dictate when you could use or sell them. Why do it with a house that you are using for a rental property?
I have learned (sometimes the hard way) that a year long rental contract is generally not in my best interest as a landlord. When I tie up my property that way I give almost all of the control to the tenant. If my tenant fails to pay rent or turns out to be a slob I will have to go to court to evict them. If I have a month to month contract I can give notice. In most places the judge will look upon someone who squats in a bad light. Even a great renter will leave early if she gets a new job in another city. If I want to sell I can move someone quickly.
In the event of a sale we can lose out if a new owner wants in the property.
Think about month to month leases. They work. Also, renters won't walk away if they like your property.
Roy Voeks
Official RE Coach
You have made some very valid points here. That is true, year leases seem to be more in favor for the tenant than the landlord. Iffy tenants that "abandon" a lease early are usually a relief to a landlord. Plus, in this market that is having a high demand for rentals, it shouldn't be hard to fill an empty unit.
If vacancy rates jump, however, the tables may turn and it may be better to lock in a tenant rather than deal with the extended vacancy costs.
Hello Roy I will make use of your advice as soon I buy my first rental property.
Thanks for sharing and all the best in your investing
TC
Miami Florida
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I like Roy's thought process on this. I have dealt with problem renters and the long contract can be an issue. On the other hand they can serve a purpose. When you have a rental property that you do not want to sell, and a good renter that needs a long term contract that is still a logical step.
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One way to keep a long-term tenant on a month to month is to state in the month-to-month lease that any rent increases will only be made on a 12 month basis. This way, the tenant has peace of mind knowing that the rental rate is frozen for a year - even on a month to month basis.