Landlords are split on the question of long-term versus short-term tenancies. On the one hand, long-term tenants — those who stay more than a year — allow landlords to minimize costs associated with advertising a new vacancy. On the other hand, long-term tenants can stifle a landlord’s ability to increase rent.
There are other advantages and disadvantages to both types of tenancies. For instance, short-term rentals may generate more income, but increase costs because of more frequent turnaround. There also is an increased risk of vacancy where the property is not producing. Yet, with long-term renters, there appears to be a higher likely of significant property damage. This is especially true where the landlord is not available to actively manage the property.
Additionally, landlords are more likely to cut corners with tenant screening when it comes to short-term rentals, while there is a tendency to view long-term renters as self-regulating and to stop managing the property day-to-day.
Sometimes the decision of whether the tenancy goes long-term is not entirely up to the landlord. The lease may provide for a month-to-month holdover, or provincial law may allow the tenant to stay in place after the end of the original lease term. That’s a problem for landlords who did not properly vet the tenants in the first place. That, along with passive management, may account for why some long-term tenancies result in property damage.
So, perhaps the best strategy for managing long-term tenants is this: screen tenants like they are staying long-term, but manage them like they’ll be there short-term.
To accomplish this, take the time necessary to screen every rental applicant who is under consideration. Pay special attention to:
The applicant’s rental history. How did previous tenancies turn out? Is the person moving at the end of the current lease? Has that been the pattern in the past?
The applicant’s credit. Does this person have a history of paying bills on time?
Other factors for a successful tenancy may include choosing a tenant who has an interest or connection to the specific location, so they’ll want to stay.
Once the tenant is in place, actively manage the property each month:
If you are going to be away, it is best to hire a property manager who can be at the property to handle repairs, complaints, and emergencies. Leaving the property to a friend or family member with no experience can be worse than having no manager at all;
Frequently inspect the property to look for hazards like drug manufacturing, damage, health issues and other concerns. In addition, check in with the tenant frequently to avoid neglected repairs during long-term tenancies. Long-term tenants can grow territorial, so it is good for them to see the owner at the property on occasion to re-establish boundaries;
Perform long-term maintenance according to your plan regardless of how long a specific tenant stays. Don’t delay needed maintenance because the tenant decided to stay on month-to-month;
Unless it’s prohibited by local law, ask a long-term tenant to provide updated contact, employment or banking information, as that may change over the course of a long-term tenancy;
While some landlords prefer the flexibility of a month-to-month lease, this can give rise to a lack of diligence on the part of the tenant in caring for the property. Renewing the lease for another set term reaffirms that commitment. Also, a month-to-month tenancy can be terminated by the tenant at an inopportune time. Allowing for a shorter-term renewal can be a good compromise.
Regardless of the length of the tenancy, choosing good tenants and offering good service remain key to profitability in any rental property.
This post is provided by Tenant Verification Service, Inc., helping landlords reduce the risks of renting with fraud prevention tools that include Tenant Screening, Tenant Background Checks, (U.S. and Canada), as well as Criminal Background Checks, and Eviction Reports (U.S. only).
Click Here to Receive Landlord Credit Reports.
Disclaimer: The information provided in this post in not intended to be construed as legal advice, nor should it be considered a substitute for obtaining individual legal counsel or consulting your local, state, federal or provincial tenancy laws.