Minooka, IL · Member since 2013 · 353 posts · 85 votes
An existing tenant I have wants a month to month lease. I'm okay with that. What's the best way to do paperwork so I don't have to meet with them every month to sign a lease.
I almost always do year leases even for renewals, but I had a tenant who wanted a month to month lease.
I wrote it up that EITHER party could cancel the rental agreement with 30 days written notice without cause. (That means for no reason, good or otherwise.)
The tenant read that and said well that means you can kick me out any time? And I said you asked for a month to month lease, that's a month to month lease. I think he thought in his mind that it would be uni-laterally month to month, as in only month to month for him. He singed the lease and stayed for a couple of years.
@Andrea Shields You need to stick to exactly what your lease says. Do not even give her one extra day. She will keep stringing you along. She's already refusing to leave. So if you don't know about how to deal with a hold-over tenant, now is the time to research that so you can go file for the court/eviction as soon as possible. Don't give her any leniency. When she sees you're serious, she'll probably try a different tactic of being sweet and nice to get some extra time. Stick by the law and the lease.
So i made the decision this past weekend to serve the 30 days notice citing repairs that needs to be done, which the tenant states were there when she took unit. Tenant now is angry and said she cannot move in 30 days and needs 60 days which I refuse. I get the sense they do not have the money to get another apartment but would rather they go at this point before I have to gut my whole unit. I told tenant its the state law that I provide notice and can possibly give extra 5 days if she is in the process of moving but that's it, she is now refusing to leave in 30 days. Do I need to do anything different at this point?
I appreciate your feedback!
There probably isn't a whole lot you can do until she stays past the 30 days. You might want to consult a lawyer since this seems to have a decent chance of requiring an eviction.
You might try offering 1/3 to 1/2 months rent if she leaves 10 days early - i.e. 20 days from notice. Of course this should only be paid once she has left.
@Andrea Shields I had a similar situation with tenants that I inherited. When I inherited the tenants, I immediately raised rent to market rates (the tenants stayed). I knew the inherited tenants side was in need of work, but since they were paying and it was meeting my cash flow needs, I let them stay.
I did have a few odd episodes with the tenants, but figured that so long as they didn't completely destroy the interior, and since I had purchased it knowing I would need to do work, I could let them stay, but not do any work to the place. As point of reference, they had broken kitchen cabinet doors where the stiles/rails come together (it's a pretty strong joint and would take a lot to break the door there). They had put holes in some walls and were requesting that I fix some of the holes. There were other issues within the house as well.
I was 'fortunate' that in August, a drunk driver hit the opposite unit of the duplex forcing a condemnation of the whole property until the structure could be improved. Well, after a month and a half of living in a motel, the tenants threatened me with a law suit because "you" (ie: me, the landlord) condemned the property and two days later informed me that if I wanted to keep them as tenants, I would have to start paying their motel bills, paying their gas costs to get to and from work (?!?!?) and paying their meals out. (I said no).
They left, very uneventfully, and now I'm repairing their unit.
Bottom line: Stick with your lease and talk with your attorney for advice on how to handle the situation.
Simply write the term of the lease for a one-month term and it will roll over monthly after that. There is risk to you in offering a month-to-month as they could move in the winter months. We always charge a 10% to 15% premium when we allow someone to go month-to-month.
The reason you want a year lease is if you are thinking of financing. Most lenders prefer to see year lease with a tenant. Some lenders will allow month to month after the tenant has completed a year lease. And like Matt Devincenzo said many leases have a clause that after the year lease, the lease converts into a month to month lease.
We offer 3 rates for renters, a year rate, a slightly higher 6 month rate, and an even higher month to month rate. I agree that when someone signs a year lease, they are more likely to stay for an entire year. The higher rates help cover my vacancy cost between tenets.
Hello BP, this is a continuation of my string of 30 days notice, so now tenant is late on rent. I have attempted contact and no response. The 30 days notice is already served and tenant should be leaving end on month. How do I address the late payment. I cant serve a 3 day notice to Quit or Pay in the middle of this process can I? Any input would be appreciated.
I do yearly leases only and never had tenants asking for M2M. There were tenants asking for 2, 3 year leases and I said no to that also.
I agree that if a tenant's life situation changes, such as moving in with a new BF/GF, new job, divorce, retirement etc...they are going to break the lease no matter what and I don't care if it's a one or two year lease.
So when I do my yearly lease, I structure it to make the one year lease as attractive to the tenant as possible on the "back end" of the lease, and couple it with an enforceable penalty. I ask for first month rent, last month rent, and security deposit, three month's worth to move in. Towards the end of the lease, they have a "free" month #12 coming which they lose if they leave. My early termination penalty is 2 month's rent. This is difficult to collect, but since I already hold last month's rent and security deposit, I do have two month's worth of rent in escrow that may be applied to the early termination penalty, and the only additional I might need is whatever damages I find. So the combination of these two at least to me makes the yearly lease more "sticky". I have also, in some rare situations, let a tenant out of a lease without penalty, such as a job loss, or moving out of state, things like that.
I had a few applicants who wanted to repaint to a different color, I said fine, but can't be a DIY job, it must be someone professional I hired, a color we both agree on, and the tenant pays for it. A few have decided to go ahead with that. I highly doubt a month to month tenant will throw $1000+ to repaint a place if I could for any reason kick him out on month #2.
The financing aspect someone already discussed, many banks sees yearly lease as stable income and monthly leases as something less desirable.
The downside of yearly or longer leases is you can't raise rent except at renewal time if the market goes up, and even then many landlords feel the obligation to keep rent the same for a good tenant. Another downside is if you are selling your property to someone who wants no tenants for whatever reason, you can terminate all M2M leases but have to wait out the yearly leases.
keep in mind there's an acquisition cost to recoup with each tenant, and signing them up for a one year term is generally a good idea to manage cash flow. I also want to manage timing of expirations. If all my leases ended in December, I'd be stuck finding tenants for all of my places in the middle of winter. If you've been at this game a while, you know how hard this is.
I've been letting them go month to month after they meet the one year minimum and don't raise rent. I find that disturbing the status quo initiates a shopping experience for the tenant, so be prepared for some turnover if you want annual extensions and rent increases. Cheaper to just keep paying tenants paying.
In one case, I had a tenant for over five years. At some point you have to raise rent, so I did. She agreed to stay for a few months and said she would leave after the months. Now she's saying she'll be there another six months.
moral is, sometimes it makes sense to allow mtm leases without a big surcharge. Just manage them properly so you have some balance in the lease expirations.
@David Krulac I agree with your statement. I'm in the process of getting a heloc on one of my properties. The bank wants to see lease agreements for my units to meet DTI underwriting requirements. However, I have a few units on a M2M basis now which is making it difficult to get the heloc approved.
I think if you're planning to get a loan approved, and want to use rental income as part of your income to qualify for the loan, then it's a good idea to keep all tenants on at least 1 year leases.