Should You Offer Month-To-Month Leases as a Landlord?

Landlords renting out their property can decide whether they want to have a standard lease agreement or a month-to-month lease agreement.

This decision is essential in property management as the lease agreement explains not only the rights and obligations of both parties but also the duration of the leasing period. 

You may start with a standard lease agreement with a set start date and end date and continue with a month-to-month lease agreement once that standard lease terminates. You can also decide to have a month-to-month lease agreement from the very beginning.

In this article, we will run you through everything you need to know about month-to-month lease contracts.

Why Go For a Month-To-Month Lease Contract?

A standard lease agreement has a set duration for a tenant’s stay. This is indicated as the start date and end date of the lease agreement.

A month-to-month lease, as the name indicates, is terminated and renewed every month. This can offer several advantages, such as:

Adjusting Your Rental Fees: A standard lease usually has a set rental fee within the duration of the lease agreement. You cannot change this easily.

With a month-to-month lease, you can easily adjust your rental fees, given the locational factors and value drivers around your property. You can perform a rent analysis to justify your rent increase.

Rental properties are regulated by state and federal rent laws which are subject to change. You may have to provide your tenants with a notice at least 15 days before raising your rent.

Accommodating Unpredictable Durations: While some tenants intend to plant roots in the area and may stay in your property for long, some pass by. 

The duration of these tenants’ stay may be unpredictable, so a month-to-month lease agreement allows you the flexibility of accommodating these tenants.

If you are a new landlord still figuring out what works and what doesn’t in rental properties, a month-to-month lease also allows you to iron out the problems you may find in your existing agreement. 

Avoiding Penalties: A landlord cannot break the lease agreement without justifiable cause, or they may face penalties. A standard lease agreement should be seen through the set start and end date.

With a month-to-month lease, you can easily break the agreement as long as you provide a month’s notice.

The Cons of a Month-To-Month Lease

As much as there are benefits to a month-to-month lease, there are also disadvantages such as:

  • Uncertainty: If you are looking for a predictable income stream, a month-to-month lease may make this income stream uncertain. Your tenant may terminate your lease within the month, and you can potentially lose that month’s income unless you find another tenant.
  • Instability: If you are looking to make concrete plans and financial goals around your rental income, a month-to-month lease can make your income unpredictable and affect these goals.
  • Looking for Prospective Tenants: Finding a prospective tenant who deserves to rent out your space can be overwhelming with the time crunch of 30 days. On the other hand, leaving the property vacant for an extended period can also be costly.

Conclusion

Other than collecting rent and maintaining your property, more comes into play for rental property management. You need to consider the lease agreement you would like to have and screen your prospective tenants.

A month-to-month lease contract comes with a degree of flexibility and protection, but it can also result in an uncertain monthly rental income. 

If weighing all these factors seems like too much work for you, you can easily hire a rental management company to take care of all of this for you.

If you are looking for a property management company in Jacksonville, Florida, we at Quest Real Estate may be the perfect match for you. We make property management straightforward for you. Head on to our website to learn more.