Month-to-Month Leases – The Good and The Bad

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Just like almost everything in life, a month-to-month lease has its pros and cons.

A common way to extend an expiring lease, month-to-month leases are a tool that landlords can use to their advantage, when appropriate. But there are pitfalls as well that landlords should be aware of before opting for this type of lease over a longer-term one.

What is a Month-to-Month Lease?

Although you can elect to start a lease with a month-to-month agreement, it is more typically used as an extension of a longer-term lease instead of a full lease renewal. Some long-term leases contain clauses that enable conversion of the lease to month-to-month upon expiration.

Without such clauses, it’s best to write a simple extension to your lease so that the month-to-month lease can be governed by the same terms. It is always advisable to have a written and signed rental lease agreement in place, even with a month-to-month tenant.

In most states, in order to change anything in a month-to-month lease agreement, each party is required to give at least a 30-day notice. This includes terminating the lease, but also changing other terms such as the rent price.

The Good Things About Month-to-Month Leases

There are several reasons to have a month-to-month lease in place over a longer-term one, and chief among them is flexibility.

Maximal Flexibility

Having a month-to-month lease means that you can enjoy collecting rent while maintaining the flexibility to find a new tenant, raising rent, renovate the property, or seek a better long term solution.

Having a good month-to-month tenant is a solid base from which to plan long term improvements to your rental and enact them relatively quickly.

Accommodate Good Tenants

If you are happy with your long term tenants and they require the flexibly themselves, this type of lease can come in handy.

For example, if your renters are looking to move or purchase a home, a short lease is a great way to keep your rental income coming in while providing them that flexibility.

The Bad Things About Month-to-Month Leases

As we’ve outlined at the start of the article, there are downsides to most decisions we make in life. With month-to-month leases, we give some things up in exchange for ultimate flexibility.

Long-Term Uncertainty

Your existing renters and their rental income can leave at any time with a 30-day notice. At that point, you would have to find new tenants and risk a vacancy.

While all leases contain the risk of vacancy upon expiration, the short notice period and the likelihood of being terminated earlier than 12 months make month-to-month leases especially risky in this regard.

Potentially Questionable Tenants

This isn’t a concern if you thoroughly vet tenants or if you are extending a long-term lease with proven good tenants, but new tenants asking for a month-to-month basis could be a red flag.

The short term nature of this lease might be a signal that your renters are not committed to living in your property short term, and therefore would be less likely to treat it as their own home.

Creating Your Own Month-to-Month Leases

If you decide to go with a month-to-month lease, make sure you use a lawyer-backed, state-specific contract.

Using Zuby, you can make your own lease quickly and easily by answering a few questions right on your smartphone.

how to create month-to-month lease

Since all of our documents are backed by LawDepot, you can rest assured that they are always up to date and legally binding.

Collecting Month-to-Month Rent Online

Using Zuby, you can specify that your property is leased under a month-to-month lease, and our app will continue generating rent payments until you terminate the lease.

how to collect month-to-month rent online