A holdover tenant is a tenant that stays in possession after the lease expires, often at an elevated holdover rent.
Leases often set holdover rent at an elevated percentage of the prior rent to encourage the tenant to leave or renew. For an investor, a holdover signals uncertainty, since the tenant may be negotiating or planning to vacate. A holdover tenant may also be treated as month-to-month, which affects financing and value. When buying near the end of a term, ask whether the tenant has exercised an option, and be careful about relying on rent that is not backed by a lease term.