Every lease agreement addresses the length of occupancy of the rental property. The majority of leases are usually for one year with the option to continue on a month to month basis. However, some leases can start out on a month to month basis. A month to month lease applies each month until the landlord or tenant exercises the required advance notice to vacate or terminate the lease. Here is a look at the pros and cons of month to month leases:
Probably the most important pro is the flexibility for both landlord and tenant to not be locked into a lengthy lease term. Tenants who are uncertain of the area or of their job situation may prefer the flexibility of a month to month lease. Landlords benefit by having the freedom to do as they wish with the property whether it be construction-related or wanting to change terms of the lease without facing a lengthy time commitment before being able to make changes.
Pro: Higher Rents
Landlords can generally charge a higher rent amount for month to month leases. The risk involved with a shorter term lease where tenants can move out at any time (with the proper advanced notice) can be offset with the higher rent required with a month to month rental lease.
Con: Turnover Costs
Landlords incur costs every time they have a new tenant: advertising costs, screening costs, property upkeep costs. So when a tenant does not stay for very long, landlords need to start the process all over to fill the vacancy. The time crunch to fill a vacancy can create pressure, so the fewer turnovers landlords face, the less pressure they have to hurry and fill vacancies.
Con: Less Stable Income
Because a tenant can move out at any time (with the agreed upon advance notice) with a month to month lease, a landlord may not be able to fill the vacancy in a timely manner. For example, if the tenant vacates in the middle of winter, it may be harder to find a new tenant during that season. An empty unit means no rental income.
There are pros and cons with month to month leases. For landlords who opt to offer such, they can use an online rent payment service that makes managing rents for month to month leases easier for both themselves and tenants. When it comes to the type of lease term, landlords and tenants can consider if a month to month rental lease is good for them.