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Logan M.
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Why I prefer Month to Month Leases

Logan M.
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  • Provo, UT
Posted Jan 9 2024, 07:07

I bought my first Mobile Home Park in 2018 and started to realize that every tenant was on a month-to-month lease. At first, I thought this could be a negative but I started realizing a few benefits.

1. Many tenants in MHPs don't care about keeping their credit up when life gets hard and are willing to break their lease regardless of length. You can't force someone to live somewhere or to pay if they just can't.

2. The flexibility to boot problem tenants far outweighs being held hostage by the bad ones.

3. It allows a lot of flexibility with future highest and best opportunities.

4. You can decide when to increase rents.

5. There is nothing cheaper to rent in my market so there are ten potential tenants for each space and because of this, the tenants would be happy being on a month-to-month lease for ten years than finding another place to live with a year lease.

I know some of these sound a little brutal but I would rather leave it up to me to make decisions than have my hands tied. 

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Replied Jan 9 2024, 07:34

That's a great insight. Thanks for sharing. 

I may try implementing M2M for one of our MHPs and see how it's received and the effect on the property performance.

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Aman S.
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  • South Riding, VA
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Aman S.
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  • South Riding, VA
Replied Jan 9 2024, 09:28

I do 1-year lease to start and then month to month after that for POHs. 

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Ned J.
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Ned J.
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Replied Jan 9 2024, 13:19

I do MTM on my SFR properties from day 1. I did that based on the advice of a friend that does evictions.

There is ZERO downside..... if people want to leave, they leave regardless of the lease terms..... and that warm fuzzy feeling of a long term lease is an illusion... you are not likely to see a dime of the remaining lease if they bail.

On the flip I can get rid of them WAY faster at any time I decide.... I have way more power. Long term favors the tenant WAY more that the LL

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Logan M.
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Logan M.
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Replied Jan 10 2024, 09:41

Great comments on here, thanks guys.

You can quickly turn a problem tenant into an angel with a M2M lease reminder.

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Erica S.
  • Columbia, SC
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Erica S.
  • Columbia, SC
Replied Jan 17 2024, 07:29

Completely agree with Logan.  I use M2M on all of my leases for the mobile home parks. When they first move in, I give them two months and then it goes M2M.  Tenants seem to feel more comfortable if the initial period is two months and not one. 

The only issue I've ever had is when I refinance. Banks don't like leases that are M2M but it is easily explainable and the underwriters realize that the tenants are really long-term, staying for years, regardless of the M2M lease. 

M2M was the only tool for successful evictions during COVID.

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Replied Jan 18 2024, 11:12
Quote from @Logan M.:

I bought my first Mobile Home Park in 2018 and started to realize that every tenant was on a month-to-month lease. At first, I thought this could be a negative but I started realizing a few benefits.

1. Many tenants in MHPs don't care about keeping their credit up when life gets hard and are willing to break their lease regardless of length. You can't force someone to live somewhere or to pay if they just can't.

2. The flexibility to boot problem tenants far outweighs being held hostage by the bad ones.

3. It allows a lot of flexibility with future highest and best opportunities.

4. You can decide when to increase rents.

5. There is nothing cheaper to rent in my market so there are ten potential tenants for each space and because of this, the tenants would be happy being on a month-to-month lease for ten years than finding another place to live with a year lease.

I know some of these sound a little brutal but I would rather leave it up to me to make decisions than have my hands tied. 

Yes!

I'm a landlord in several states and have found some states, its almost a requirement to only rent month-to-month because either the court system doesn't work well, a smart tenant can game a 1 year lease, and the judges can take something as "black and white" as "Non-Payment" of rent and make it a NUANCED conversation. The Judges can't nuance a 30 day notice that ends the lease and ends tenantship.

L. Thomas

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Kevin Sobilo
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  • Hanover Twp, PA
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Kevin Sobilo
  • Rental Property Investor
  • Hanover Twp, PA
Replied Jan 18 2024, 11:21

@Logan M., a MTM agreement probably does make sense in your situation.

However, in other situations I think a 1 year lease makes better sense. I live and invest in what I consider a neutral state (PA). Fair to both landlord and tenant.

For me leases make sense because I want good tenants! The difference is I can attract good tenants which is perhaps different than your MHP. If I rent a B class SFH, I can attract a good tenant, BUT a good tenant has worked so that they have choices in life. So, I look carefully at the "value proposition" I offer a tenant. I want to not only attract them but also keep them 2+ years to reduce vacancy/turnover.

A tenant wants stability and a good tenant has CHOICES. I want that good tenant to choose ME and want to STAY WITH ME! So, a 1 year lease is more attractive to them and also to me.

A lease is more attractive to me because I have never needed to try to evict for any reason other than failure to pay and have had no difficulties doing that. I suspect that 99% of evictions are failure to pay so the ability to nonrenew a tenant isn't any great benefit for me.

I do understand with a rougher tenant pool, you may need to more actively manage the tenant's and their behavior. So, I can see how MTM probably makes sense and it would too for me if I was renting D class rentals in my area.

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Replied Jan 18 2024, 16:27
Quote from @Kevin Sobilo:

@Logan M., a MTM agreement probably does make sense in your situation.

However, in other situations I think a 1 year lease makes better sense. I live and invest in what I consider a neutral state (PA). Fair to both landlord and tenant.

For me leases make sense because I want good tenants! The difference is I can attract good tenants which is perhaps different than your MHP. If I rent a B class SFH, I can attract a good tenant, BUT a good tenant has worked so that they have choices in life. So, I look carefully at the "value proposition" I offer a tenant. I want to not only attract them but also keep them 2+ years to reduce vacancy/turnover.

A tenant wants stability and a good tenant has CHOICES. I want that good tenant to choose ME and want to STAY WITH ME! So, a 1 year lease is more attractive to them and also to me.

A lease is more attractive to me because I have never needed to try to evict for any reason other than failure to pay and have had no difficulties doing that. I suspect that 99% of evictions are failure to pay so the ability to nonrenew a tenant isn't any great benefit for me.

I do understand with a rougher tenant pool, you may need to more actively manage the tenant's and their behavior. So, I can see how MTM probably makes sense and it would too for me if I was renting D class rentals in my area.


Depends on the state!

In Phoenix, I do 2 year leases and discount the rent a bit if they sign it. 

But the court system works wonders there. 

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Kevin Sobilo
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Kevin Sobilo
  • Rental Property Investor
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Replied Jan 18 2024, 16:44
Quote from @Lucas Thomas:
Quote from @Kevin Sobilo:

@Logan M., a MTM agreement probably does make sense in your situation.

However, in other situations I think a 1 year lease makes better sense. I live and invest in what I consider a neutral state (PA). Fair to both landlord and tenant.

For me leases make sense because I want good tenants! The difference is I can attract good tenants which is perhaps different than your MHP. If I rent a B class SFH, I can attract a good tenant, BUT a good tenant has worked so that they have choices in life. So, I look carefully at the "value proposition" I offer a tenant. I want to not only attract them but also keep them 2+ years to reduce vacancy/turnover.

A tenant wants stability and a good tenant has CHOICES. I want that good tenant to choose ME and want to STAY WITH ME! So, a 1 year lease is more attractive to them and also to me.

A lease is more attractive to me because I have never needed to try to evict for any reason other than failure to pay and have had no difficulties doing that. I suspect that 99% of evictions are failure to pay so the ability to nonrenew a tenant isn't any great benefit for me.

I do understand with a rougher tenant pool, you may need to more actively manage the tenant's and their behavior. So, I can see how MTM probably makes sense and it would too for me if I was renting D class rentals in my area.


Depends on the state!

In Phoenix, I do 2 year leases and discount the rent a bit if they sign it. 

But the court system works wonders there. 


Excellent! I would do that as well. I tried offering 2 year leases for a little while but tenants were leery of the long term commitment maybe because they were new to me and a longer lease seemed "unusual" to them and therefore scary.

If my typical tenant was a little more sophisticated financially they probably wouldn't be so leery about it but I typically get good decent working class people even in my B class rentals.

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Replied Jan 18 2024, 16:54
Quote from @Kevin Sobilo:
Quote from @Lucas Thomas:
Quote from @Kevin Sobilo:

@Logan M., a MTM agreement probably does make sense in your situation.

However, in other situations I think a 1 year lease makes better sense. I live and invest in what I consider a neutral state (PA). Fair to both landlord and tenant.

For me leases make sense because I want good tenants! The difference is I can attract good tenants which is perhaps different than your MHP. If I rent a B class SFH, I can attract a good tenant, BUT a good tenant has worked so that they have choices in life. So, I look carefully at the "value proposition" I offer a tenant. I want to not only attract them but also keep them 2+ years to reduce vacancy/turnover.

A tenant wants stability and a good tenant has CHOICES. I want that good tenant to choose ME and want to STAY WITH ME! So, a 1 year lease is more attractive to them and also to me.

A lease is more attractive to me because I have never needed to try to evict for any reason other than failure to pay and have had no difficulties doing that. I suspect that 99% of evictions are failure to pay so the ability to nonrenew a tenant isn't any great benefit for me.

I do understand with a rougher tenant pool, you may need to more actively manage the tenant's and their behavior. So, I can see how MTM probably makes sense and it would too for me if I was renting D class rentals in my area.


Depends on the state!

In Phoenix, I do 2 year leases and discount the rent a bit if they sign it. 

But the court system works wonders there. 


Excellent! I would do that as well. I tried offering 2 year leases for a little while but tenants were leery of the long term commitment maybe because they were new to me and a longer lease seemed "unusual" to them and therefore scary.

If my typical tenant was a little more sophisticated financially they probably wouldn't be so leery about it but I typically get good decent working class people even in my B class rentals.

 The strategy to sell it is this: 

I offer a 2 year option and I'll discount your rent by $50 a month. That's a $1200 savings and I offer it so I don't have to track a millions renewal each year and it stops me from unreasonably raising your rent in 1 year or giving you a 30 day notice at the end of the year. Why wouldn't you want that protection? 

This strategy has worked for me as I don't like one-and-done tenants and this gives the "Lifers" to identify themselves. HA. 

Landlords lose all their money on turnover. 

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Replied Jan 18 2024, 17:04
Quote from @Lucas Thomas:
Quote from @Kevin Sobilo:
Quote from @Lucas Thomas:
Quote from @Kevin Sobilo:

@Logan M., a MTM agreement probably does make sense in your situation.

However, in other situations I think a 1 year lease makes better sense. I live and invest in what I consider a neutral state (PA). Fair to both landlord and tenant.

For me leases make sense because I want good tenants! The difference is I can attract good tenants which is perhaps different than your MHP. If I rent a B class SFH, I can attract a good tenant, BUT a good tenant has worked so that they have choices in life. So, I look carefully at the "value proposition" I offer a tenant. I want to not only attract them but also keep them 2+ years to reduce vacancy/turnover.

A tenant wants stability and a good tenant has CHOICES. I want that good tenant to choose ME and want to STAY WITH ME! So, a 1 year lease is more attractive to them and also to me.

A lease is more attractive to me because I have never needed to try to evict for any reason other than failure to pay and have had no difficulties doing that. I suspect that 99% of evictions are failure to pay so the ability to nonrenew a tenant isn't any great benefit for me.

I do understand with a rougher tenant pool, you may need to more actively manage the tenant's and their behavior. So, I can see how MTM probably makes sense and it would too for me if I was renting D class rentals in my area.


Depends on the state!

In Phoenix, I do 2 year leases and discount the rent a bit if they sign it. 

But the court system works wonders there. 


Excellent! I would do that as well. I tried offering 2 year leases for a little while but tenants were leery of the long term commitment maybe because they were new to me and a longer lease seemed "unusual" to them and therefore scary.

If my typical tenant was a little more sophisticated financially they probably wouldn't be so leery about it but I typically get good decent working class people even in my B class rentals.

 The strategy to sell it is this: 

I offer a 2 year option and I'll discount your rent by $50 a month. That's a $1200 savings and I offer it so I don't have to track a millions renewal each year and it stops me from unreasonably raising your rent in 1 year or giving you a 30 day notice at the end of the year. Why wouldn't you want that protection? 

This strategy has worked for me as I don't like one-and-done tenants and this gives the "Lifers" to identify themselves. HA. 

Landlords lose all their money on turnover. 


 WARNING: 

2 Year Leases - This Strategy only works in STATES that Have Good-Working Eviction Court. MANY STATES DON'T!!!

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Kevin Sobilo
  • Rental Property Investor
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Kevin Sobilo
  • Rental Property Investor
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Replied Jan 18 2024, 17:06
Quote from @Lucas Thomas:
Quote from @Kevin Sobilo:
Quote from @Lucas Thomas:
Quote from @Kevin Sobilo:

@Logan M., a MTM agreement probably does make sense in your situation.

However, in other situations I think a 1 year lease makes better sense. I live and invest in what I consider a neutral state (PA). Fair to both landlord and tenant.

For me leases make sense because I want good tenants! The difference is I can attract good tenants which is perhaps different than your MHP. If I rent a B class SFH, I can attract a good tenant, BUT a good tenant has worked so that they have choices in life. So, I look carefully at the "value proposition" I offer a tenant. I want to not only attract them but also keep them 2+ years to reduce vacancy/turnover.

A tenant wants stability and a good tenant has CHOICES. I want that good tenant to choose ME and want to STAY WITH ME! So, a 1 year lease is more attractive to them and also to me.

A lease is more attractive to me because I have never needed to try to evict for any reason other than failure to pay and have had no difficulties doing that. I suspect that 99% of evictions are failure to pay so the ability to nonrenew a tenant isn't any great benefit for me.

I do understand with a rougher tenant pool, you may need to more actively manage the tenant's and their behavior. So, I can see how MTM probably makes sense and it would too for me if I was renting D class rentals in my area.


Depends on the state!

In Phoenix, I do 2 year leases and discount the rent a bit if they sign it. 

But the court system works wonders there. 


Excellent! I would do that as well. I tried offering 2 year leases for a little while but tenants were leery of the long term commitment maybe because they were new to me and a longer lease seemed "unusual" to them and therefore scary.

If my typical tenant was a little more sophisticated financially they probably wouldn't be so leery about it but I typically get good decent working class people even in my B class rentals.

 The strategy to sell it is this: 

I offer a 2 year option and I'll discount your rent by $50 a month. That's a $1200 savings and I offer it so I don't have to track a millions renewal each year and it stops me from unreasonably raising your rent in 1 year or giving you a 30 day notice at the end of the year. Why wouldn't you want that protection? 

This strategy has worked for me as I don't like one-and-done tenants and this gives the "Lifers" to identify themselves. HA. 

Landlords lose all their money on turnover. 


Maybe I'll try it that way. I forget if I offered a discount or just no increase. I typically rent a little less than what many other landlords do. So, I could easily advertise $50 higher and offer the discount without sacrificing interest in the property based on the advertised price.

I also try to avoid 1 and dones. I scrutinize the value proposition I offer tenants pretty heavily so that I can try to exceed a 2 year average stay and I definitely exceed that. I just did some quick math and my current tenants have been with me an average of about 3.2 years and that number is skewed low because of a couple units more recently bought and put into service.

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Replied Jan 18 2024, 17:08
Quote from @Kevin Sobilo:
Quote from @Lucas Thomas:
Quote from @Kevin Sobilo:
Quote from @Lucas Thomas:
Quote from @Kevin Sobilo:

@Logan M., a MTM agreement probably does make sense in your situation.

However, in other situations I think a 1 year lease makes better sense. I live and invest in what I consider a neutral state (PA). Fair to both landlord and tenant.

For me leases make sense because I want good tenants! The difference is I can attract good tenants which is perhaps different than your MHP. If I rent a B class SFH, I can attract a good tenant, BUT a good tenant has worked so that they have choices in life. So, I look carefully at the "value proposition" I offer a tenant. I want to not only attract them but also keep them 2+ years to reduce vacancy/turnover.

A tenant wants stability and a good tenant has CHOICES. I want that good tenant to choose ME and want to STAY WITH ME! So, a 1 year lease is more attractive to them and also to me.

A lease is more attractive to me because I have never needed to try to evict for any reason other than failure to pay and have had no difficulties doing that. I suspect that 99% of evictions are failure to pay so the ability to nonrenew a tenant isn't any great benefit for me.

I do understand with a rougher tenant pool, you may need to more actively manage the tenant's and their behavior. So, I can see how MTM probably makes sense and it would too for me if I was renting D class rentals in my area.


Depends on the state!

In Phoenix, I do 2 year leases and discount the rent a bit if they sign it. 

But the court system works wonders there. 


Excellent! I would do that as well. I tried offering 2 year leases for a little while but tenants were leery of the long term commitment maybe because they were new to me and a longer lease seemed "unusual" to them and therefore scary.

If my typical tenant was a little more sophisticated financially they probably wouldn't be so leery about it but I typically get good decent working class people even in my B class rentals.

 The strategy to sell it is this: 

I offer a 2 year option and I'll discount your rent by $50 a month. That's a $1200 savings and I offer it so I don't have to track a millions renewal each year and it stops me from unreasonably raising your rent in 1 year or giving you a 30 day notice at the end of the year. Why wouldn't you want that protection? 

This strategy has worked for me as I don't like one-and-done tenants and this gives the "Lifers" to identify themselves. HA. 

Landlords lose all their money on turnover. 


Maybe I'll try it that way. I forget if I offered a discount or just no increase. I typically rent a little less than what many other landlords do. So, I could easily advertise $50 higher and offer the discount without sacrificing interest in the property based on the advertised price.

I also try to avoid 1 and dones. I scrutinize the value proposition I offer tenants pretty heavily so that I can try to exceed a 2 year average stay and I definitely exceed that. I just did some quick math and my current tenants have been with me an average of about 3.2 years and that number is skewed low because of a couple units more recently bought and put into service.

EXACTLY!

Bake the Discount Into the Price. 

You deserve a Premium for taking a one-year contract. 

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Replied Jan 18 2024, 17:11
Quote from @Lucas Thomas:
Quote from @Kevin Sobilo:
Quote from @Lucas Thomas:
Quote from @Kevin Sobilo:
Quote from @Lucas Thomas:
Quote from @Kevin Sobilo:

@Logan M., a MTM agreement probably does make sense in your situation.

However, in other situations I think a 1 year lease makes better sense. I live and invest in what I consider a neutral state (PA). Fair to both landlord and tenant.

For me leases make sense because I want good tenants! The difference is I can attract good tenants which is perhaps different than your MHP. If I rent a B class SFH, I can attract a good tenant, BUT a good tenant has worked so that they have choices in life. So, I look carefully at the "value proposition" I offer a tenant. I want to not only attract them but also keep them 2+ years to reduce vacancy/turnover.

A tenant wants stability and a good tenant has CHOICES. I want that good tenant to choose ME and want to STAY WITH ME! So, a 1 year lease is more attractive to them and also to me.

A lease is more attractive to me because I have never needed to try to evict for any reason other than failure to pay and have had no difficulties doing that. I suspect that 99% of evictions are failure to pay so the ability to nonrenew a tenant isn't any great benefit for me.

I do understand with a rougher tenant pool, you may need to more actively manage the tenant's and their behavior. So, I can see how MTM probably makes sense and it would too for me if I was renting D class rentals in my area.


Depends on the state!

In Phoenix, I do 2 year leases and discount the rent a bit if they sign it. 

But the court system works wonders there. 


Excellent! I would do that as well. I tried offering 2 year leases for a little while but tenants were leery of the long term commitment maybe because they were new to me and a longer lease seemed "unusual" to them and therefore scary.

If my typical tenant was a little more sophisticated financially they probably wouldn't be so leery about it but I typically get good decent working class people even in my B class rentals.

 The strategy to sell it is this: 

I offer a 2 year option and I'll discount your rent by $50 a month. That's a $1200 savings and I offer it so I don't have to track a millions renewal each year and it stops me from unreasonably raising your rent in 1 year or giving you a 30 day notice at the end of the year. Why wouldn't you want that protection? 

This strategy has worked for me as I don't like one-and-done tenants and this gives the "Lifers" to identify themselves. HA. 

Landlords lose all their money on turnover. 


Maybe I'll try it that way. I forget if I offered a discount or just no increase. I typically rent a little less than what many other landlords do. So, I could easily advertise $50 higher and offer the discount without sacrificing interest in the property based on the advertised price.

I also try to avoid 1 and dones. I scrutinize the value proposition I offer tenants pretty heavily so that I can try to exceed a 2 year average stay and I definitely exceed that. I just did some quick math and my current tenants have been with me an average of about 3.2 years and that number is skewed low because of a couple units more recently bought and put into service.

EXACTLY!

Bake the Discount Into the Price. 

You deserve a Premium for taking a one-year contract. 

 I end all of my ads with: 

Sign a longer lease, get a discount on rent. 

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Alexa Davison
  • Real Estate Agent
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Alexa Davison
  • Real Estate Agent
Replied Jan 19 2024, 08:10

I have switched from year long leases to M2M for many tenants and have had much better luck with it. My mobile home park has been undergoing some major renovations as well, such as freshly paved roads, updated septic system, fencing the property, and security cameras, on top of typical rehabs of each unit. Prospects actually seem to appreciate the offer of month to month because I advertise that since we are going through renovations, a non-binding lease does not make them feel hostage to a park under construction. It's a win-win situation all around. They don't feel stuck and pay as long as they'd like to stay, and as a property manager, I can provide a 30-day non-renewal in the case that they are bad tenants. You are absolutely right that you can never make anyone stay, leave, or pay if they don't want to.

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Logan M.
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Logan M.
Pro Member
  • Investor
  • Provo, UT
Replied Jan 19 2024, 16:13
Quote from @Alexa Davison:

I have switched from year long leases to M2M for many tenants and have had much better luck with it. My mobile home park has been undergoing some major renovations as well, such as freshly paved roads, updated septic system, fencing the property, and security cameras, on top of typical rehabs of each unit. Prospects actually seem to appreciate the offer of month to month because I advertise that since we are going through renovations, a non-binding lease does not make them feel hostage to a park under construction. It's a win-win situation all around. They don't feel stuck and pay as long as they'd like to stay, and as a property manager, I can provide a 30-day non-renewal in the case that they are bad tenants. You are absolutely right that you can never make anyone stay, leave, or pay if they don't want to.


 Great approach, thanks for sharing. I would love to learn more about your park!

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Michael Smythe
Property Manager
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Michael Smythe
Property Manager
#5 Managing Your Property Contributor
  • Property Manager
  • Metro Detroit
Replied Jan 22 2024, 05:02

It's our experience that MTM leases are a false solution.

First, in Michigan there are statutes that don't allow a landlord to put water in a tenant's name unless a lease is for at least 12 months. Also, you cannot charge a tenant for ANY maintenance or repairs unless they are on a 12-month lease.

Regarding the thinking of MTM leases making it easier to get rid of a tenant, in our experience, a well written lease will cover any tenant violations allowing you to evict them. We do it all the time.

Yes, many low-demographic tenants will move whenever they want, regardless of lease length, but how does a MTM benefit a landlord? So, logically, this is a nonissue either way.

The only circumstances we've had issues with 12-month leases revolve around repairs. If a court orders the landlord to make repairs, then having a MTM lease MAY allow a landlord to just get rid of the tenant. Some courts may also consider this a retaliatory eviction, so it's not 100% effective.

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Samuel Coronado
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Samuel Coronado
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Replied Jan 22 2024, 08:25

I take it a step further. Week to week. We get a 13th month of rent as such. Say the monthly rent is $1000. We divide that by 4 to equal $250. $250 x 52 = $13,000 a year instead of $12,000. These are still tenants who stay for years (4 years in some cases for our longest one) and love the weekly option.