Month To Month Or Full Year Lease?
I am a landlord in Columbus, Ohio. The rents have been a bit soft lately and Columbus seems to be getting a bit overbuilt due to the low interest rates.
In the past, we have insisted on full year leases, and we have timed most of them to end during the summer months when I as a teacher, have more time to deal with them. Also, the summer is the best time to find tenants and get a good rent as many of our tenants are somehow connected to the Ohio State University.
Last year and the year before, however, our turnover was startling. We have nine units, and each year, 6 people moved out. All were happy with the apartments but moved out for various reasons such as buying a new house, getting married, etc.
We are looking for ways to keep our tenants this summer. I fear that by insisting that the tenants commit to another full year, that they then take the time to think and plan and then move on. One idea I had was to just allow the leases to go month to month. I need some feedback on whether this might help me to keep tenants.
Any other ideas would be helpful.
Seems that if you offered a month-to-month lease that would encourage even more turnover?
I agree in that going mo/mo may encourage more turnover, not less. This scenario is what makes having a lot of rentals easier in that if you habe one unit out of two empty you are hurting whereas 1 unit out of 20 is not as painful. Maybe asking for a higher security deposit would help.
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In a college town/area, you need the year-to-year leases...In my experience, a unit in a college town is very difficult to rent after the fall until the spring semester starts, and it is still not as easy as during the fall. Anywhere else, i'd say sign'm up on a year lease and then go month-to-month, tenants will stick around if they don't have to say "do I want to be here for another year?" they just keep paying their rent and don't really think about it as much....that is my experience...
I normally always go year to year to insure a steady income and not have to worry about vacancies. Since I rent homes all the leases are staggered just because that's the way it turned out so I never have to worry about having more than one empty for an extended period. I have done a 6 month lease on people that didn't have a great credit history explaining to them that this is a trial period and if it doesn't work out then it protects me from having a less than desireable tenant. I took on two tenants with a fico score of under 650 and they have both worked out fine. Many times people come into a bad divorce and have a bankruptcy and are trying to get back on their feet and by looking at the credit report I can determine if in fact they are paying the bills on time in the past year or so. Because I only have 4 homes this is not a hard process but it would probably be if you had a lot of properties taking on individuals and their problem past. I have been blessed and the wife an I visit our tenants from time to time and even give them anywhere from 100-200 dollars back as a Christmas present. That is a great way to keep people from being bad tenants. I'm also in the medical field (family pracitce) and it's very interesting in the malpractice industry that if you treat your patients nicely and have a good professional relationship they will not sue you even if you do commit malpractice ( I never have) . Same goes in the tenant/landlord relationship. Do unto others....
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