The Pros and Cons of Month-to-Month Leasing for Boston Owners

Month-to-month leasing is an option many property owners consider for different tenant situations. However, there are advantages and disadvantages to this type of lease agreement, which should be considered before offering this type of lease to renters. Today, our Boston property management experts talk about the pros and cons of monthly rental agreements to help property owners make informed decisions!

What Is a Month-to-Month Lease?

A longer-term lease is most common in residential leases, but some circumstances warrant a short-term lease. A month-to-month lease is a short-term arrangement between a rental owner and tenant in which the renter lives in the property but does not have a fixed expiration date. The lease renews monthly until either the owner or residents give 30-days notice to move out or vacate.

In most cases, a residential lease agreement covers 6, 12, 18 months (or longer). However, a standard lease agreement will often contain a hold-over clause that lets tenants know that if they want to stay in the residential property after the lease ends (without signing a new long-term lease), the agreement automatically converts to month-to-month.


Legal document Month-to-Month Lease Agreement on paper

What Are the Advantages of a Month-to-Month Lease for Rental Property Owners?

If you're searching for total flexibility in your Massachusetts residential lease agreement, a month-to-month lease may be the way to go. You may still profit from your properties without committing to a long-term arrangement if your tenants need a short-term place to stay or if you plan to sell the investment property soon. Month-to-month leases provide the following advantages to landlords.

Flexibility

With a month-to-month rental agreement, ending the lease is as simple as giving your renter enough notice that you will not be extending the lease. On the other hand, a long-term lease means property owners can't terminate the agreement mid-term without legal cause to evict. With a monthly agreement, a property owner has more flexibility in renting the home and can accommodate tenants looking to move in soon. 

More Rent Increases

Real estate investors can raise the monthly rent price without violating the law when offering a month-to-month lease as a renewal alternative. Raising the rent can increase revenue. However, frequent rate increases can discourage residents from staying. The best rental management Boston offers recommends using rent increases strategically to maximize returns while retaining excellent tenants (even on a month-to-month basis).

Good Tenants Stay Longer

Finding good tenants can be difficult and expensive. However, after you find an excellent renter who pays the monthly rent on time and takes care of the property, you want to make sure you keep them. If you have excellent tenants and they want a month-to-month renewal, it can be worth offering this option to encourage them to stay longer and provide more time for you to find new residents. 

Break the Lease With No Penalty

In most cases, there's no penalty for canceling a month-to-month tenancy as long as the renter has been informed in advance. If you're dealing with a resident that doesn't pay on time or breaks the rules, having a monthly agreement in place makes it easier to give them 30-days notice and start fresh with a new renter after they move out. 

What Are the Disadvantages of a Month-to-Month Lease?

Month-to-month rental leases are advantageous in a variety of ways, but they also have certain disadvantages. Therefore, property owners should consider the cons of a monthly Massachusetts lease agreement before offering the option to renters. 

An Ambiguous End Date

Some circumstances may benefit from a flexible end date, but this flexibility can generally lead to uncertainty for an investor. You want a good tenant who will stay long-term to generate consistent monthly rental income. However, with a monthly agreement, your renter can give notice and move out within 30 days. This can leave you with a sudden loss of income and no new tenant ready to move in. 

Little Time to Find New Tenants

Finding new renters in only 30 days may be difficult. Being under a time crunch puts additional pressure on you to find renters, especially as the vacancy date approaches. This time crunch might hinder your ability to screen potential renters carefully. The best approach to ensure you're renting to good tenants who pay rent on time is through an effective tenant screening process, so you don't want to skimp on this step in the process.

A company that delivers professional property management services can help ensure that a proper tenant screening is in place to place quality residents. 

Fluctuations in Rental Income

Having excellent tenants is always beneficial, but keeping them for a short time isn't as good as securing a long-term lease agreement. Renting on a month-to-month basis is more volatile than renting yearly, making rental income less reliable month by month. 


Smiling calm young black woman relaxing on comfortable wooden rocking chair

Hire a Property Manager to Help Create the Ideal Lease Agreement

Every rental property and situation are different. If you're not sure the type of agreement that's best for your long-term goals, enlist the help of a Boston property management company to make sure every residential lease agreement works toward achieving your financial goals. CHARLESGATE Property Management partners with Boston owners every day to find good tenants and keep them longer! Reach out soon to learn more about our full-service property management. 

To learn more about leases, download our free "How to Create a Custom Lease Agreement."

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