Rent Sense: Why a Long Term Lease?
By Neil Fjellestad & Chris De Marco
FBS Property Management
Some renters want a month-to-month rental agreement in order to maintain the ability to move should their situation change (employment, home purchase or a household change) and they don’t want to be tied to a long-term lease. Rental owners and property managers understand this and some will allow such a renter but will charge a substantial premium to the rent rate. The premium is charged because the rental owner is at risk for unanticipated rent loss due to giving the renter the ability to terminate the lease at a time during the year when there are fewer replacement renters such as during the months November-January.
It has always been considered a “best industry practice” that a long term lease attracts and best serves qualified renters. The financial loss to a renter from reoccurring moving costs completely overshadows any benefit of remaining free to do so. We will consistently choose to retain our existing residents as their lease expires because the owner(s) will experience an interruption of rent and out-of-pocket costs connected to the turnover. Therefore, residents that have paid their rent on time and kept up the rental home normally get preferential treatment at renewal subject to the then current market, of course.
Due to projected supply and demand for well-located rental homes, condos and apartments rental rates will increase (2-3%) this year and (3-5%) in 2013.
Most rental owners are seeking to raise rents across the board in order to repay out-of-pocket expenses endured during the last several years and/or to accomplish repairs and improvements that they have deferred. As a month-to-month tenant you are not protected from multiple rent increases though recent legislation requires longer notice and a reason if the tenancy is being terminated.Owners will often postpone requested maintenance and/or repairs until you move.
An owner’s decision to sell the rental property can affect the renter(s) living in that home. If a property is being offered for sale, is in foreclosure or it is given back to the bank a real estate company is hired to sell the home/property. It is often the decision to vacate the property as it is believed to be much easier to sell an empty property. Being on a long-term lease can give you some control in all these situations.