A Month-to-Month Lease Agreement: Pros and Cons for Tenants

The decision of whether to enter into a month-to-month lease with your tenant should not be taken lightly. A lot will depend on your priorities and your needs as a property owner. However, understanding the advantages and disadvantages of these leases for tenants can help you experience better success with rental properties. 

With all this in mind, the best property management company Lexington has to offer suggests working with a professional to make sure your leases protect your properties while improving renewal rates. First, let's look at the pros and cons of a month-to-month lease agreement for your residents.

What is a Month-to-Month Lease?

Before we answer whether a month-to-month residential lease agreement is suitable for you, let's define what it is. While most lease agreements are for a more extended period—say 12 months—a month-to-month lease renews every month.

That means, at the end of every month, your resident may choose to continue with the same terms and conditions in their next rental period or move out on short notice without penalty. A property owner also has the option of terminating the lease at the end of each month with proper notice.

The Pros of a Month-to-Month Lease Agreement for Renters

Now that we've defined a month-to-month lease, let's look at some of the advantages for your renter. While many tenants prefer long-term leases that set the rental rate for twelve months or more, sometimes a monthly contract fits their needs better. 

• More control over when the lease ends. Renters can enjoy the advantage of a flexible lease, where they aren't tied down to a rental unit for months or even a couple of years. This is especially valuable for a resident who may be moving because of a job change or students who finish a semester before a long-term lease expires. Property owners can also help renters that may be in Lexington or the Boston area for only a short time due to a project or to care for a family member. 
• More flexibility with finances. Renters can take advantage of a cheaper rental property with a quick 30-day notice to their landlord. In addition, with the option to move when a good property comes up at a better price for their finances, renters can save money without risking penalties for breaking a lease early. 
• Peace of mind. Renters don't have to worry about breaking a lease if they want (or need) to move quickly. 

While some renters prefer this kind of flexibility, property owners must remember that tenants can give notice and move out in 30-days. Month-to-month agreements can lead to high vacancy rates and inconsistent monthly rent income.

The Cons of a Month-to-Month Lease Agreement for Tenants

While there are plenty of advantages to considering a month-to-month lease agreement, there are some drawbacks for residents as well. A residential property manager can tell you that these disadvantages include:

• Having to move out on short notice. Just like a tenant can give quick notice to end a monthly lease, a property owner can, as well. If a landlord decides they don't want the tenant to stay or they want to sell the home, with proper notice, a renter could have only thirty days to find a new home they can afford. 
• Higher rental rates. With a month-to-month lease, residents often pay higher rental rates than with a commitment to a long-term lease.
• Uncertainty. With the potential to lose their rental home with only a 30-day notice, renters face housing uncertainty. 

In most cases, it benefits property owners and tenants to sign long-term leases. However, owners and renters should weigh the pros and cons before committing to a monthly agreement. If you're trying to decide whether a short-term lease might benefit you and your residents, hire a Boston property manager to offer some guidance that aligns with your financial goals. A property manager has experience creating a standard lease agreement and creating a custom one that can match your financial goals.

Take Advantage of Lexington Property Management Services When Creating Leases

If you're considering a short-term agreement, make sure to consult with an attorney or Lexington property management professional who can help put together the best lease terms that meet your needs. They can also help you plan the process, so when a renter does decide to leave, you can get the rental unit ready quickly and reduce the vacancy time between tenants.

CHARLESGATE Property Management specializes in helping investors improve returns and prioritizing the renter experience. We take on the daily and monthly tasks of operating rental properties, so property owners see better ROIs and enjoy the benefits of owning rental real estate! To learn more about our full-service property management or how we help property owners set up the ideal lease agreements, reach out to our team.