Wonder Why We Use 3-Year Lease Terms On Our Standard Leases?
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Renting Student Focused Housing In Waterloo Is Different Than Anywhere Else
In Waterloo a majority of property management companies and independent Suite Owners will rely on a 3-year lease term when signing leases. This article will review the reasons why this lease type is used including the pro’s and con’s of using. a 3-year lease term.
Reason 1 - The Undergraduate Academic Schedule
While Sage Living does not rent exclusively to students, students remain our primary rental demographic. Approximately 95% of our managed suites are rented to students attending a local university.
The average academic schedule shared by Ontario universities include a 3-year long undergraduate program. In having a 3-year lease term your rental is then reflects the average academic schedule shared by a majority of student renters. This will make it easier for these renters to continue with the lease for the full 3-year term.
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Reason 2 - Avoiding Month to Month Leases
A critical part of renting in Waterloo relies on optioning or being able to predict suite availability. By knowing which suite will become available before the Tenant provides minimum notice, our office can then market and work to re-rent the suite with as much notice as possible.
To better prepare for suite availability, and ensure our managed suites are always fully rented, our office must decrease or entirely eliminate the possibility of month to month leases.
Month to month leases can occur when a Tenant’s current lease continues past the fixed end date of the lease.
Example: If your Tenant rents from September 2021 to August 2022, this means they can continue to live in the suite past August 2022 on a month to month lease.
Tenants within a month to month lease have the ability to provide 60-days notice to terminate their lease agreement. While this may not seem concerning, this can cause major complications for Suite Owners.
A majority of Tenants looking for leases in Waterloo will rent for either September of May each year.
This means that if your current Tenant is on a month to month lease, and chooses to end their lease during a period of time where it is difficult or unlikely to re-rent the suite, the Owner could experience several months of vacancy until a new Tenant is located.
Example: If the Tenant cancels for February, it is unlikely a new lease will be secured for a start date other than May or September.
Reason 3 - Securing Steady Rent
Some Owners have struggled with short term leases and are unable to maintain the same rental rate each year. Problems like the recent pandemic resulted in some Owners losing Tenants and having to re-rent their suite for a cheaper rate.
In having a fixed rental rate for a set 3-year lease, the Owner can rely on a steady rent amount being collected each year for a minimum 3-year term. While some Owners have previously captured high rent for a single year or less, they may have recently faced complications where they had to offer large rental discounts.
Owners with 3-year leases and renewing Tenants typically earn more over a 3-year long average than those Owners who attempt to push for short term leases.
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