Are you considering signing a month-to-month lease for your rental property? A month-to-month lease is a popular trend among landlords in North Dallas. About 60% of landlords prefer a monthly lease, according to a National Apartment Association survey.
These leases offer a great many advantages to landlords. You can adjust rent at any time. You can also end a month-to-month lease with a few days’ notice. But is it really a great option for landlords? Choosing the lease type can be confusing. Let’s weigh the pros and cons and figure out which type of lease is best for you.
What Is a Month-to-Month Lease?
A month-to-month lease is a short-term rental agreement that runs for one month at a time. It allows you or your tenant to end the agreement with 30 to 60 days’ notice. It’s useful for those who don’t want to commit to a long-term lease.
It’s an attractive option for landlords because it offers a great degree of flexibility. You can change the rent when you want. Or you can even end the agreement at any time if needed. However, these are usually more expensive than longer-term leases.
Whether you use a month-to-month lease really depends on your needs. Let’s understand whether a month-to-month lease is the right option for you.
Advantages of a Monthly Lease
The month-to-month lease has numerous advantages for landlords.
In a month-to-month lease, you can choose to renew the lease each month or end it with a 30-day notice. This gives you the power to decide when you would like to end the tenancy.
It’s a great option for seasonal properties or those who are unsure of how long they would like to have a tenant.
Easier to Increase Rent
You can increase rent on a month-to-month lease with a 30-day notice. So, if the rental market is booming, you won’t have to wait for your long-term lease to end. And, if your tenant is not paying on time, you have the option to terminate the lease.
Short-Term Termination Notice
For landlords hoping to have greater control, a month-to-month lease can be an ideal solution. This type of agreement offers significant flexibility in terms of ending a lease when necessary. Landlords can end the lease by providing tenants with 30 days’ notice in most states.
Easier to Fill Vacancies
A month-to-month lease is generally easier to fill compared to a fixed lease. This is because tenants have the option to stay for a shorter period, making it more appealing to those who are looking for a temporary living situation.
Disadvantages of a Monthly Lease
Using a month-to-month lease comes with its own set of drawbacks for landlords. Comparing the advantages and disadvantages can help you decide which lease is best for you.
Higher Maintenance Costs
Your tenants may move out frequently. This means you will have to do cleaning and repairs often. It can be a big issue if you are managing multiple rental units. So, every time a tenant moves out, you must ensure every detail is taken care of and that maintenance is always a priority.
Additionally, if you fail to properly inspect the unit before a new tenant moves in, you could be responsible for any damages they cause. This can be a costly mistake.
Higher Risk of Unreliable Tenants
A short-term lease sometimes attracts tenants who aren’t financially stable. Such tenants may not pay rent on time or take good care of the rental unit. This whole situation can leave you in a difficult financial situation. Good tenant screening is essential.
More Administrative Work
Furthermore, you might end up doing more paperwork if you must constantly renew short-term leases. This can become a hassle and consume valuable time. You also might have to do the paperwork for the eviction process if you have new tenants every now and then.
Best Practices for a Successful Month-to-Month Lease
Month-to-month leases can be a really profitable option if you know how to handle them. Here are some tips to ensure that you are profiting from the short-term lease.
- Make sure you have a thorough tenant screening process in place. It’s important to ask for references, credit and background checks and other relevant information before signing a month-to-month lease.
- Have a clear understanding of what you expect from your tenant. Make sure to include all your expectations in the lease agreement.
- Charge a higher rent than you would with a long-term lease. This will offset the risk of vacancy and provide an incentive for the tenant to stay.
- Make sure all of your documents are up-to-date and that you are in compliance with all local laws and regulations
- Include a clause in the lease that states that either party can terminate the lease with 30 days’ notice
- Ask for a security deposit to cover any potential damages or unpaid rent
- Have a clear plan for how you will handle late payments and other issues that may arise
- Make sure the tenant understands that the month-to-month lease is not a long-term commitment and that it can be terminated at any time
- Stay in communication with your tenant and be willing to compromise
- Consider hiring a property manager if you’re uncomfortable managing the rental yourself
Why Work with a Property Management Company?
Working with a property management company is a great idea for landlords when choosing a month-to-month lease for a variety of reasons. You can get help from experts in handling tenant inquiries and complaints.
Property management companies can also take care of the day-to-day operations. You don’t have to worry about collecting rent payments, scheduling maintenance, and ensuring the property follows local laws.
Finally, a property management company can also help landlords handle any potential financial issues that may arise with a month-to-month lease. You can protect yourself from any potential legal issues, such as disputes over the lease agreement.
A month-to-month lease offers landlords more flexibility but also comes with more risks. You may be able to terminate the lease agreement more quickly. But you also have to be diligent in ensuring that your tenants are following the rules and regulations of the lease agreement.
Additionally, landlords must be prepared to raise rent prices when necessary or face the risks of tenants vacating the property. Ultimately, it is up to the landlord to decide if a month-to-month lease is the best option for their property.
Get in touch with Keyrenter North Dallas today to figure out how we can help your rental investment excel!