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Mentor
Id take the 3 year lease. Long term stability is worth more than a few hundred bucks MAYBE if rent prices change.
Subject Expert
Why is the second one so anxious to lock in a longer term deal? I assume there’s no rent control, so $150 per year raises sound semi low. But a longer term lease is definitely tempting
Depends on carry cost and projected local growth. If CC is high, the long term lease is favorable bc it guarantees no gap in lease for 3 years. If local rent projected growth is high, the ST lease is favorable bc you retain the option to jump rent.
All else equal, I’d offer 3400/3700/4000 on Deal 2. Even 1 month of being without a tenant would likely surpass potential increase in rent price on Deal 1.
SPM1, SC1: we don’t have any rental restrictions in the neighborhood. Total 5 of 42 are on rent. Barring one home (took them 4 months and rent drop from 3600 to 3150). Rest all haven’t seen vacant more than a month. In general max rent in area is 3800-4000 with extra 300-350 sq ft.