Are Month to Month Leases Worth it For Landlords?

It is becoming more and more common to see landlords willing to agree to month to month leases for their tenants. But are month to month leases actually worth it for landlords? Let’s take a closer look at what month to month leases entail and why they may—or may not—be worth it for a landlord.

Month to Month Leases vs. Annual Leases

A traditional lease is typically for 12 months, though some leases may be longer depending on the property and the location. Since traditional leases lock in tenants for 12 months, there is more notice for contract renewal. A month to month lease, on the other hand, is renewed on a monthly basis. This means that tenants can renew—or not renew—their leases on a monthly basis.

Are There Benefits to a Month to Month Lease?

For landlords—not particularly. The benefits to month to month leases rest primarily with tenants. Tenants can benefit from having a more flexible contract which they can leave on short notice, leaving landlords in a potential lurch if they don’t have new tenants lined up (which may be difficult depending on the time of year or if most people in the area are already locked into 12-month leases). Problems can also arise with month to month agreements if there is an issue regarding damage to the apartment or other rental space.

Why Landlords Should Avoid Month to Month Leases

There are plenty of reasons why landlords should avoid month to month leases. The most notable are:

Uncertainty regarding the end of a tenancy contract

Because month to month contracts do not have a fixed end date, there is a lot of uncertainty regarding the status of a tenancy contract. Will the tenant renew? Or leave? This can cause a range of issues for landlords who will find themselves unsure as to whether a tenant will renew. Landlords need time to advertise for future tenants, so suddenly needing to find new tenants with less than 30 days of notice can be a huge problem. Landlords will also need time to inspect the apartment or rental unit for damages and pursue them if necessary. Landlords may need time to take new photos, create new listings, and all the other time-consuming actions that come with re-listing a space.

Unstable income

Twelve-month or longer contracts ensure that landlords have stable income, whereas month to month contracts can effectively end at any moment; this means the income from these contracts may disappear with little to no warning at all, leaving landlords scrambling to make up the difference. Instability can be a serious problem for landlords, who—like tenants—have their own bills to pay and financial obligations to meet.

Final Thoughts

Month to month contracts may sound appealing to certain tenants, but for landlords, they provide nothing but instability and the unending hassle that comes with tenants who can choose to leave without hardly any warning. Landlords, as a rule, should stick to longer contracts instead.

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