...worth about $950

Two houses, 7 rooms total, both running as separate room leases. Through 2023 every single lease ended between July 15 and August 31 because that's when I signed the first ones and everybody renewed on the same cycle. Last summer four of the seven rooms turned inside a six week window. Two filled in nine days, one took five weeks, one took nine weeks because by mid-August everybody who was moving had already moved. 61 room-days empty across the summer.

So at renewal I put a term menu in front of everyone. 9 months at $25 over the standard rate, 12 months at the standard rate, 15 months at $25 under. Nobody argued about the pricing. Four of seven took something other than 12.

End dates now sit in March, May, June, August, September, November and February. Last twelve months I ran 22 room-days empty across all seven rooms against 61 the year before. On about $62,000 collected, 39 fewer empty room-days at roughly $24 a room-day recovered about $950 of rent, and it also meant I was never filling more than one room at a time, which is worth something separately because I stopped rushing.

What nearly wrecked it: the first 9 month term I sold ended in late January. Filling a room in a cold January in my market took 24 days and I dropped $40 to close it. So I now won't write a term that ends between December 1 and February 15, and if the menu math lands there I push it out to the next month and prorate. That's the one thing I'd have done from the start.

The other thing I'd keep is the $25 spread. It's small enough that nobody feels sold to and big enough that the 15 month option looks like a deal to someone who already likes the house. Two of my longest tenants came out of that.

What I'm less sure about is whether the March and November end dates are actually good or just less bad than August. I don't have enough cycles to know.

Answer

2wendy_park48CapitalPRO7

The operating result is clean. The paperwork question I'd raise is whether the blackout window lives anywhere other than your head.

Right now you're managing seven leases with seven different end dates and a rule about which months you won't write into. Next year you'll be renewing under time pressure and you'll write a term ending January 20 because the tenant asked for it and it was Tuesday. Two fixes I'd want in the documents themselves. First, a renewal notice window tied to each lease's own end date, something like tenant gives notice by 60 days before end of term, because with a single common end date you only had to remember one deadline and now you have seven. Second, a standing addendum or an internal term sheet that lists the permitted end months, so the rule survives you being busy.

The other thing worth checking is whether your seven leases are now seven different document versions. Every time I've seen someone re-paper leases one at a time over 15 months, they end up with three generations of language in the same house, and the house rules addendum is usually the part that drifts. When one tenant's copy says quiet hours at 10 and another's says 11, you have no enforceable house standard, only two contracts. Pull all seven and diff them.

On the March and November question, one signal you can get cheaply without more cycles: pull your own inquiry counts by month from whatever you list on. Days to fill is your outcome number and inquiries per week is the input. If November inquiries run at half of May's, you'll know before you learn it the expensive way.

6 replies

3kevin_lombardPG1BPRO5

Prorate to push the end date out, does that mean the tenant pays a partial month at the front or the back? Trying to picture how you move an end date without changing the term length everyone agreed to.

1diane_kowalskiPassivePRO9

22 versus 61 room-days is a 64% cut and you did it with pricing, not capital. That's the part I like.

1Rena Expert

What you built is a diversification of turn timing, and it works for a specific reason worth naming. Room-level demand is seasonal in most markets, so days-to-fill is not constant across the year. When all your end dates cluster in the same weeks, you take the whole year's turnover risk at whatever that season's fill rate happens to be, and you also compete against your own listings for the same pool of inquiries.

Spreading end dates does two things. Your average fill time moves toward the annual average rather than being pinned to one month, and you stop stacking multiple vacancies at once, which is what usually forces a price concession or a fast placement you regret.

The cost side is that you now hold more small administrative events across the year rather than one large one. Seven renewal decisions on seven dates is more calendar management than seven on one date, and turn labor no longer batches, so if you were paying a cleaner for four rooms at once at a volume rate you may pay more per room now.

On your March and November question, 22 room-days across seven rooms in one year is too small a sample to rank months. What you can measure is inquiry volume per listing week by month, which accumulates faster than turn events do.

The assumption your $950 rests on is that the rooms you filled in the off-peak months filled at your standard rent. If the November and March placements needed a concession, part of the recovered vacancy came back out as rent. Check the actual signed rate on each of those against your asking rate before you carry the $950 forward.

1ehernandez74PO2BPRO5

Did anyone take the 9 month term and then just renew for 9 more, and if so are you drifting back toward clusters over time? Feels like the end dates could migrate until two of them land in the same month again.

0jessreyes12AU1APRO8

The thing I'd have been too embarrassed to ask: how do you sell a 15 month lease to someone without it sounding like you're locking them in? Do you say the discount out loud or does it just show up as a lower number on the menu?