The Reluctant Landlord

  • Home
  • About Us
  • Archive
  • Work with Me!
    • Guest Post
  • Contact
  • Disclaimer
  • Self Management
  • Military & Real Estate
  • Buying & Selling
  • Property Manager
  • Our Strategy
  • Books
You are here: Home / How to Hire a Property Manager / How to Choose the Best Lease Term

How to Choose the Best Lease Term

July 20, 2014 by Elizabeth Bennett Colegrove 2 Comments

This post may contain affiliate links.

There are many different types of lease terms and they have different pros and cons. Here are a few examples…

Lease Term

Three Lease Terms to Choose From:

1. Month To Month (M-to-M):

  •  Pros: A short term lease allows either party to break the lease with 30 or 60 days notice depending on the lease.
  •  Cons: Tenants can break the lease at any time with proper notice. This is a problem if there are definite moving seasons in your areas.
  •  Ask Elizabeth: I only allow m-to-m leases with a $300 short term penalty. This compensates for the extra risk depending on the moving season and the work I have to replace the tenant.

2. 12 Month

  •  Pros: This is a normal lease term.
  • Cons: A tenant can still break the lease. See: “Buy-Out Clause.”
  • Ask Elizabeth: This is my normal lease term, but I have a Buy-Out Clause that effects both sides.

3. Multi-Year

  •  Pros: This lease term locks in a tenant for a longer term. It reduces the term over.
  • Cons: The tenant can still break the lease (see: Buy-Out Clause), and longer terms can allow the property to fall below market rate by a large margin. Especially if a lower rate was given for a long term lease.
  •  Ask Elizabeth: I have seen rental rates increase 10-15% in some markets. At the same time I have had four tenants break the lease due to buying a house or taking a different job in the past year.

In most cases, I use a 12 month lease with a Buy-Out Clause for my standard lease. I do offer a short term leases with a $300 a month premium as well.

What about you? What type of lease term do you prefer?

1

Filed Under: How to Hire a Property Manager, I am a Reluctant Landlord, I am a Small Time Landlord, I am an Empire Builder, Self Management

Comments

  1. Ben Biggs says

    November 1, 2014 at 6:40 am

    So for your short term leases, you charge $300 extra per month, is that correct?
    Any takers on that option so far? The market I’m looking at right now wouldn’t necessarily support that…

    Reply
    • escolegrove@hotmail.com says

      November 1, 2014 at 3:08 pm

      Ben, Thank you for your reply. I personally do not believe in month-to-month leases. As a landlord they provide nothing but headache. In my markets there is a definite moving season. A period of time where most people move allowing lots of supply and usually the highest rent of the seasons. On the other hand as a landlord I try to be accommodating and understanding to everyone. Therefore I allow month-to-month leases at a $300 premium. This also allows you, the landlord to be able to get your tenants to resign a lease at their first renewal especially if you have a rental increase.

      Reply

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

I love my family, my country and real estate. My goal is to retire early through frugal living and real estate investment. I am making great strides and want to share the information I've learned through the process. Read More...

CHECK OUT MY BOOK!

Sign up for the Newsletter
JOIN HUNDREDS OF OTHERS IN RECEIVING OUR FREE WEEKLY UPDATES STRAIGHT TO YOUR EMAIL INBOX!

Most Popular Posts:

  • How to Create Freezer Meals for One Person
  • 3 Ways a Landlord Can Split the Utilities
  • How to Set Up Your Rental Accounts
  • The Solution to a Broken Lease: The Buy-Out Clause
  • What are a Military Widow’s Death Benefits?
  • How to Write a One Page Lease Renewal!
  • How to Write an Incredible Lease
  • How to Get Rid of Cat Urine in Cushions, Carpet and Clothes
  • Is it Worth Buying a House if You Move Every Two Years?
  • Landlords: Should You Include a Washer and Dryer in Your Rental?

GET THE BUTTON


More Posts from this Category

Search

Categories

Archives

Copyright 2023, The Reluctant Landlord. All Rights Reserved. Custom design by Pixel Me Designs
Sign up for the Newsletter
JOIN HUNDREDS OF OTHERS IN RECEIVING OUR FREE WEEKLY UPDATES STRAIGHT TO YOUR EMAIL INBOX!
[close]
Brought to you by
Displet