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I would never let a renter set the terms of a lease.
Sorry let me clarify, I would would want the lease to lean in my favor vs the tenants. A limit to just a couple hundred a year could backfire on you easily based on market rates, taxes and insurance. I would do a % instead with stipulations. Though on the flip side, maybe you paying a little extra is worth it to get a 2 or 3 year contract locked into place.
I’d say no. Start with 1-1.5years at the rate you set (or are willing to meet them at, rent typically isn’t negotiated but doesn’t mean it can’t be) and get to know your tenant. Locking someone in for 3 years seems really risky to me - what if they trash the place?
We’ve rented to a few different tenants and have learned:
- roommates tend to be less astute on their ability to predict the future housing needs. Unless it’s a stable family where switching costs are high, one year is good (it’s a norm for a reason)
- do not sleep on the maintenance savings. If you’re first year is a wash to get stated, you are at risk for anything breaking. If you’ve got realtor fees, this place sounds new and you have no insight to current condition beyond disclosures.
- taxes fluctuate and Zillow estimates are often garbage. No one wants a rent increase but you may need more cushion than what you’re planning.
- some tenants suck. Some punch holes in walls, some ruin the floors, some creep out their roommates and want you to intervene (not your problem but can impact people’s paying of rent on time), and some are amazing and handy and a value add to your home. You don’t know from an application.
We have the same in our lease clauses. You’ll probably go through some headaches leading up to executing the clause but at least you have an out.
It’s a trade off - there’s benefit to finding new tenants less often, there’s benefit to having an expected window to do necessary maintenance between leases.
Glad the comments were helpful. Good luck with whatever you choose!
Depends on the rent rate, would typically be a %, $100/month increase may easily be swallowed with increases in taxes (especially if it's currently showing as homestead/owner occupied) and insurance. You could say a flat $ amount or increase in expenses (taxes, insurance, repairs) whichever is greater.
Flip side is long term minimizes the move in/out damage and time to turn.
Get a good deposit and solid lease!
PS: throw in a yearly or semi-annual walk through where you or a manager changes smoke detector batteries and checks filters so you can get eyes on current condition
Thanks MD1, I was planning to do a check at the end of first 3 months and then once a year.. I will rethink about it
I would do 1 year to see how they are as tenants.
The $100 may or may not be a good rent increase. If X=1,000 then it's great, if X=5k, not so much. What I like is a 5-7% increase
Thanks that’s 3%
Why are you even entertaining a proposal from a prospective tenant, especially this offer? This is not a thing. You set the rent terms (usually a 1 year lease). When the lease is nearing its term end, you re-assess the market and adjust accordingly. And realty fees? For what? Post the home for rent on Zillow.