5 Reasons to Use a Month-to-Month Lease

Updated 6/21/24

There are two main types of leases. Fixed term and month-to-month. Many landlords prefer to have a stable and long tenant in their rental. Most of the time, this works. We’ll go over 5 reasons why you might want to start using a month-to-month lease with your future tenants.

Flexibility for Both Parties:

• Tenant Turnover: If you anticipate needing to reclaim the property for personal use, sale, or extensive renovations, a month-to-month lease provides the flexibility to end the rental agreement with relatively short notice.
• Tenant Needs: Some tenants may prefer the flexibility of a month-to-month lease due to uncertain job situations, plans to purchase a home, or other personal reasons. Offering this option can attract a wider range of tenants.

Increased Rental Income:

• Market Adjustments: With a month-to-month lease, you have the opportunity to adjust rent more frequently based on current market conditions, potentially increasing your rental income more regularly than with a fixed-term lease.
• Premium Rates: Month-to-month leases often command higher rent compared to long-term leases due to the increased flexibility offered to the tenant.

Easier Tenant Management:

• Problem Tenants: If you find that a tenant is not a good fit due to payment issues, disruptive behavior, or other problems, a month-to-month lease allows for easier and quicker termination compared to a fixed-term lease.
• Tenant Screening: If you’re uncertain about a new tenant’s long-term suitability, starting with a month-to-month lease gives you a trial period to assess their reliability and compatibility with your property.

Responsive to Personal Circumstances:

• Life Changes: As a landlord, your circumstances might change unexpectedly, necessitating the need to move into the property or sell it. A month-to-month lease offers the flexibility to respond to these changes without the constraints of a long-term lease.
• Investment Strategy: If you are considering different investment strategies or market conditions suggest a potential sale, a month-to-month arrangement allows you to act quickly without waiting for a long-term lease to expire.

Simplified Lease Renewal Process:

• Administrative Ease: Managing lease renewals can be time-consuming. With a month-to-month lease, there’s no need to negotiate and sign new lease agreements every year, reducing administrative work.
• Tenant Relationships: For tenants who are responsible and reliable, a month-to-month lease allows you to maintain a positive relationship without the pressure of committing to a long-term agreement. This can lead to longer overall tenancy as tenants appreciate the flexibility and may choose to stay longer even without a fixed-term lease.

Overall, month-to-month leasing offers a balance of flexibility and control that can be advantageous in various rental market conditions and personal circumstances.