I prefer to do lease renewals vs converting a lease to MTM. Why do you do what you do?

And if you do an automatic lease renewal what terms do you use?

I will add an automatic rent increase and know 2.9% is bandied about here. Do you make it the greater/ lessor of x% or x$ amount?

We only do month to month. When we bought our 6 unit in 2014, we inherited some bad tenants, and wanted to be able to cheaply re-home them. Leases seemed to work more in the tenants favor rather than the LLs. Tenants would simply do a midnight move out if that suited them. After the inital rehab, our apartments are easy to turn over and easy to rent. We are in an area of rising rents. It has only been in the past 2 years that we have been getting tenants with good credit scores, who would care about a ding if they broke a lease. We have only had two vacancies so far this year, both filled with good quality tenants paying $150/month more than previous tenant.

Month to month just seems to make better sense for our property than annual leases. I do a set amount of rent raise each year. I did $20 a month this year, which works out to 2.4% on my $825 rent.

I do lease renewals.

I like the predictability of knowing when a unit will become vacant. My lease and presentation make it clear that runaways will be pursued, and mu choice of tenants ensures that I take only tenants who have something to lose by not winding up their affairs in an orderly way.

I raise rents upon renewal, based on the prevailing rate at the time of renewal.

Moshe,

so you do not say the lease will renew w/ a rent increase?

Like Mose I prefer renewal for the stability of vacancies. Our lease requires 60 days notice and if no notice is given then it automatically rolls over for another year. I do not include the percent of rent increase in the lease since rentals rates keeping moving higher and are unpredictable and recently unbelievable.

" so you do not say the lease will renew w/ a rent increase? "

Thats right.

I do not have an automatic renewal specification, for two reasons.

One is that I mzay not want to renew.

The other is that the price for next year will be set by the prevailing conditions at the time of renewal.

As we approach the end of the term of the leased, I will usually offer to renew the lease for an additional one year, but my lease provides for an automatic conversion from the lease to a month-to-month. Either way, I need to evaluate the rent amount for the next year.

I am happy either way. I have tenants who have been with me for well over a decade on a month-to-month. The only paperwork we do is for a change of the original lease provisions -- rent increases, tenants (one tenant married and we added his wife; another property, parents died and adult child remained in the property), pets, whatever.

Under a month-to-month, I am supposed to get 30 days notice, and that is far more notice than I really need.

I'm going to keep things the way I have done them. No automatic renewal and no automatic rent increase. I thought there was more of a voice for those things here (MTM seems to get the most chatter).

So my lease will not have renewal language and 60+ days out I will send a lease renewal inquiry letter w/ or w/out an increase and if I am not changing the terms of the lease, my letter states the new lease period and has a place for the tenant and myself to sign.

My lease shifts to M2M at the end of it, but it already establishes what year two rent will be when they sign it in the first place.

By doing so, I am training the resident to expect the small increase routinely. I am doing so when they are most likely to accept and agree to the increase - when they want the keys initially. This point in the business transaction is when the LL has the most influence to outline specific terms and rules of the lease.

I do like Moshe's point about knowing the market place in the future. I take a gamble saying prices will be going about 1% the following year without looking at the market place. Given how quickly the market places along the coast can shift - a market place approach makes good sense. Having rentals that in an area that is so stable, my small increase works here.

New lease each year, not automatically renewed, rent not automatically increased. My lease terms change every year, they get updated based on things I learn here and at the Convention, and I don't want different people living under different rules if I can help it.

I tend to raise rents 2% only every third year, if they stay, and at turnover if they don't - then I go as high as the market will bear.

In NC, a M2M lease only requires a SEVEN day notice to terminate. Not anywhere near enough time to market and find new tenants. An annual lease requires 30 days minimum although we put 60 days in ours.