The Pros and Cons of Longer Leases
While a 1-year lease is average, landlords have the option of offering virtually any duration to their tenants. Leases that are longer than one year can have their benefits, but there are some downsides to be aware of as well.
Pros of Longer Leases- Retention of high-quality tenants – if you offer a lease of 1.5 years or more to a new tenant, you could get lucky and find that they are the perfect fit for your property. In that instance, having them on a longer lease works out to your benefit. You can also try offering a longer lease to a tenant whose initial lease has expired once you know they are the kind of tenant you’d like to keep there for as long as possible.
- Pride of ownership – as someone looking for a longer lease is typically looking to establish some roots, they’re more likely to take pride in their home. A tenant on a shorter lease may only see the property as a temporary place to live, and that can impact their ability to really treat your property like it’s home.
- Fewer vacant periods – this point is pretty self-explanatory. As long as you’ve got a tenant living in the property while on a lease, you never need to worry (much) about it not generating income.
- Commitment to the property – the more time that elapses, the more likely it becomes that you’ll experience life changes. While you can try to sell a home and transfer the lease to the new owners, this can make a single-family home harder to sell if people are looking to live in the home and not use it as an investment property. As a result, it may be easier to break the lease. However, the regulations for doing this vary by state, and the process could cost you both time and money.
- Retention of bad tenants – you may be stuck with a bad tenant for a longer period of time, and not all such tenants fall under the criteria for eviction. For example, if personal conflict occurs with a tenant, it can make them undesirable to deal with. If they’re paying their rent and maintaining your property appropriately, then you simply need to wait for your long lease to run out.
Trust your instincts when offering a lease to a tenant. By the time you’ve completed a screening report and interviewed them in person, you should have a good idea of what you’ll be comfortable with!
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