I made another big change to my processes. After a decade of doing one year leases, this year I had three tenants move out after just moved in last year. So I said enough, I will require initial two year leases, then they can renew for a year at a time. I will also increase my ELT to three months from two months.

Then. I got to more thinking. Why not three?? So , in the Zillow ad, I will write that the rent is advertised for three year lease, but two year lease is available for $100 extra a month. This way I get to advertise at a lower rent but still allow tenant to choose 2 or 3 year.

yes, I can add annual increases in the lease, but that's not a priority for me, I'm happy to cut the tenant a break in exchange for staying longer

If I have a tenant I don't like, it can be tough to ride out the year until the end of the lease. I suspect that having a three year lease with a difficult tenant would be hellish.

I can't imagine getting a new tenant to sign a three year lease. I don't know what I will be doing in a year, let alone two or three.

Not positive but I think 3 years is the max in Indiana then you have to do other things.

A prospective tenant a few years ago told me about another place that had two year hard leases. Where the tenant was still responsible for the entire lease time even if the tenant moved and the place was rented out again. Wow

I do like the idea of a discount for longer time frames tho. Not sure how you would keep a tenant in place if they wanted to go. Personally I don't want to force someone to stay at my place for a long period of time when they want out. That seems like a recipe for disaster.

Listen to Oregon Woodsmoke. Do you really want to lock yourself into 3 years with a possible miserable tenant? What will you do when you want to get rid of a tenant?

Why are your tenants moving out? If it has been to move to another state for job or family, your 3 year lease won't stop that. If it's been to move to another area in your city, there are other problems in play that you should think about.

Sounds like you need to invest in commercial properties instead of residential.

One year is the norm in residential. Part of the business.

What you need to do is ask this question:

I think it’s a great idea David…. Real men would do five years though. So go for three and if it works out and you have an excellent qualified tenant come along, go for 5 years! ;-) What could possibly go wrong?

I can see the potential however, just like what Oregon Woodsmoke stated... they will move on without any thought unless they really like the place and plan on staying there.

I like one year lease and it becomes month to month after on year.

After ten years, I can't think of a single tenant I would have given notice to if they were m2m. Every single tenant I have offered renewal to.

I won't even do 1 yr leases. You are not going to hold a tenant to a lease if they really want to move out and good luck trying to get the money from them after they are out and gone.

I would never do a 2 yr or 3 yr lease. Tenants will leave when they want but you would be locked into the lease that you created for 2 or 3 years with many hoops to jump over to get them out if needed. Search your state landlord tenant laws to see how longer leases are more difficult than shorter ones if a tenant goes bad and trust me when I say they can out of the blue.

I suspect the LLs that love M2M to get out problemic tenants are not screening properly. The requirements are not high enough to weed out problem tenants so M2M is used as a crutch

If a tenant is problematic within a year of moving in, they didn't go bad, they were already bad when they moved in and the screening wasnt thorough even to catch it

David, since the tenant has an out anytime they want by using ELT, what factors are at play to lengthen their stay?

I use 12 month lease that automatically renews for additional 12 months with 4.9% rate increase.

"what factors are at play to lengthen their stay?" Sisco, don't understand what you mean here

What I am asking is What part of this makes an improvement in your operation?does writing a 36 month lease encourage a longer stay?

Sisco, I think both

When applying, it should discourage applicants who already planning only to live there a year.

Once they living there, the high cost of ELT discourage tenants from moving unless they absolutely have to.

I still do year lease, but can see where MTM makes sense from a regulatory perspective. It's less about picking a bad tenant, than the process limiting your remedies. I want tenants that intend to stay more than 2 years, but have not had any that would want to be locked into a new relationship w a ll.

The entire covid fiasco made month to month more attractive. Landlords could not terminate a lease, but they could still give a notice to vacate to a month to month tenant.

My month to month tenants would stay about three years with exceptions like divorce, job loss, new criminal girlfriend, terminal illness. In those cases, I wanted them out anyway, so we were all happy that they could just pack up and move with no fuss.

"so they tend to behave better and they straighten up quickly if you ever do have to give them a notice"

Its not a matter of class of tenants

I tend to have quality tenants, but that being said I still use m2m leases. People change, why would I not want the freedom to terminate an agreement at a legal moment’s notice? What if I decide I’d like to sell off my portfolio and move to Mexico?

I'd hope that anyone moving to mexico for legitimate reasons would have a planning time horizon longer than a couple months.

People change yes, but i would not want to rent to anyone who changes in a few months, that tells me they are unstable and have deeper issues.

Here are some of my numbers:

11: number of years I've been LLing

1: the number of times I've not renewed a lease and that was because they refused to pay off the water bill prior to renew

2: the number of times I've filed eviction, for non payment

1: number of times I've actually done setout with court officer

15-20: number of ELTs I've collected (too many to count)

1: number of ELTs I was owed but didn't collect. That was because the tenant came to me in advance and we agreed that because he'd kept the house in immaculate condition, I would use his 1.5 mos deposit + a commercial lawn mower in the garage

0: mid might move outs

over 20: number of tenants that have asked me how they could exit their lease

People change. It's in their nature. I know I have changed over the years.

I used to pick whomever came in first. That got expensive. Then I started vetting the applicants a little. That was less expensive as I had fewer problem people.

I have learned a lot from this site and the people who contribute good knowledge. I am still not positive I want to go to year or longer leases even with an ELT. It is very attractive, but I am on the fence.

Saying that it is always an error in the application process is not correct, in my humble opinion. I have screened better, but some people are professional deadbeats in the making. Some have nefarious thoughts or poor judgement.

Had a lady with two kids in an apartment. She decided to let her ex move back in. All was good until then. She was forced to leave by court order.

In my area I do not have to give just cause if the lease is MTM. I can just say I don't want to rent to them any more. No proving problems or lease violations. They can't do the he said she said stuff. It does help when they get notice and decide to not pay that last 30 days rent though. Icing on the cake and all that.

But people change. My mother in law and her 13 year old daughter went out for a nice day of shopping. They came back to an empty house and a dear John letter. She had no clue. He had planned it for over a year. They had been together for over two decades of marriage, two kids plus were high school sweethearts.

"

In my area I do not have to give just cause if the lease is MTM. I can just say I don't want to rent to them any more. No proving problems or lease violations. "

I once collected data on my tenants and compared credit scores and length of stay. I found a sweet spot. Someone with a score above 570 but below 700 stayed the longest.