How long of a lease term should you offer for your rental property?

It’s not uncommon that prospective tenants will call and ask us if they can get a two-year lease for a discounted rental rate, thinking that we’re looking for long term peace of mind. In a perfect world, that would make sense. We wouldn’t have to worry about the property for a couple of years.

But today, tenants and their conduct are unpredictable. They aren’t always reliable, and the tenancy isn’t always perfect. And, the market could change. What if the rents in your area suddenly go up, but you cannot change the terms of your lease for two more years?

Six Month Lease Terms Keep Tenants Honest

We recommend that you enter into a six-month lease agreement. This should be the maximum length of your lease. It keeps tenants honest with their intentions. You won’t have them move in and then move out two months later after their house gets out of escrow. A six month lease means you don’t need to worry about re-renting the property every month.

Most Tenants Won’t Move After Six Months

Moving is expensive, and most people think it’s a pain. No one likes to move.

Before you as an owner or a landlord start to worry that a six month lease doesn’t offer much peace of mind or security, consider that with the expense and the hassle of moving, your tenants will probably stay in place and renew for another six months. It has been our experience, after managing nearly 600 properties that tenants won’t move after six months.

We recommend that you offer a six month lease – maximum. Then, you can change the terms and increase the rent after those six months. It allows you flexibility, and gives you the leverage you need as a landlord and property manager.

If you have any questions, or you need to hire a great property manager, please contact us at Noble Real Estate.