While many people assume landlords prefer a 12-month, long-term lease, there are many benefits of month to month leases for landlords and tenants!
Before we delve deeper into what’s our main subject for today, it’s best if we take a look at what options landlords (and tenants, too) have before they reach an agreement. Here are the two most frequent types of leases: month to month and fixed long-term leases.
What is a month to month lease?
This is a short-term rental lease contract that will renew each month without a scheduled cancelation date. Unless, of course, it’s previously announced otherwise.
Most laws on the landlord-tenant relationship demand at least a 30-day notice by the tenant or landlord for the cancellation of the lease, and the agreement itself will direct how the notice will be delivered. However, if your tenants leave without any warning, that’s what you call tenant abandonment.
What is a fixed long-term lease?
This type of lease is generally the most popular length of lease.
Landlords like this type since the money flow from the tenant’s monthly rent is pretty predictable & locked in for 12 months. Also, they have to invest less money for the eventual renovations new tenants might demand be done. Or repairing the damage left behind by the previous tenants.
On the other hand, tenants like this type of lease since the rental amount (the price) is permanently locked until the new lease agreement is generated. So, if this type of lease suits both sides, why would anyone want to opt for a month to month lease agreement? You’re about to find out!
Benefits of month to month lease for landlords
Even though long-term leases tend to be the most popular lease length for rental property owners, there are many advantages to month to month rentals for both landlords and tenants.
#1 The opportunity to charge a higher rent
A primary benefit of month to month leases is that it allows landlords to increase the rent price more frequently than they otherwise could with a long-term lease.
Let’s give an example. Imagine if rent prices in your area rapidly rise, and you’re stuck with a 12-month fixed long-term contract. If you’re a tenant, you’ve done well.
However, if you’re a landlord, you’ll only lose money. If you’ve signed a month to month agreement, you’ll be able to give the current tenants a proper notice and then rent the place to a new tenant for a more significant sum, unless, of course, the current tenant can pay more.
When renting your place in a month-to-month manner, you’re not locked into a fixed-term rental price. If you decided to increase the rent, you can easily give your tenant a month’s notice (or the legally required amount of time).
#2 Keeping your options open
Besides the potential to increase the rent price, landlords also enjoy more flexibility once they’ve signed a month to month lease.
Imagine you suddenly have to sell the place, but tenants are inside your apartment. With a month to month contract, you’ll only have to wait 30 days for them to move out. Or imagine there are significant renovations to be done – you won’t have a hard time evicting your existing tenants.
Lastly, you might suddenly get the idea of moving into the place yourself and transferring all your stuff. You can easily do so almost right away, as all you have to do is inform your tenants and find available movers by utilizing a website such as Best Movers in Florida, where you can get matched with your perfect moving team and be on the go. Moving prices might go up, and you don’t want to wait another couple of months for them to rise even more.
#3 Tenant management
Another one of the benefits of month to month lease for landlords is related to tenant management.
A short-term lease is a great way to test out your tenants before offering them a long-term fixed lease. Once folks prove to be well-mannered and good tenants, you can give them the option of signing a long-term lease.
Or, imagine if you talked to a potential tenant waiting for a job offer to come through. If this offer doesn’t and the tenant can’t afford the rental unit, you and the renter can easily part ways with the required notice.
There are many benefits of month to month lease for landlords. Even though longer-term leases might be preferred by many landlords, there are some cases where a monthly lease is better for both landlords and tenants, especially those looking for a shorter-term arrangement. Ultimately, it will be up to you to determine which length of lease is best for your rental property business!