How much extra should you charge for a month to month lease?

Question

I have a mobile home that I'm renovating. Due to a large industrial project in the area, there is a need for short term housing for construction workers. I'm trying to decide whether I want to do a month to month furnished with all bills paid vs a typical long term lease. How much extra should I charge. Below are the details.

Regular long term lease $850, electricity $250, water $50, internet $75. How much extra should I add for the increased turnover and hassle of a month to month.

Bjorn Ahlblad · Answer

@Craig Janet most of my tenants are MTM. My experience is the length of the lease has no bearing on how long a tenant stays.

If you intend to furnish and pay all utilities you will want to charge a whole lot more. Probably 1050/mo plus all the utilities. So 1050+375=1425 total. I'd break it out as rent + utilities, or it will sound like too much.

Nathan Gesner · Answer

A lot of people miss out on a lot of money by not charging extra for monthly leases.

I determine the rate for a one-year lease, then increase it 25% for a monthly lease. It's amazing how many people pay the higher rate and then stay for a year or longer. I have one tenant that paid the 25% increase because he was only going to be there for 2-3 months. He just finished his second year.

Sergey A. Petrov · Answer

The only way to decide is to run comps. What are the rates on furnished short(er) term rentals in the area? How much are you spending to furnish and what is the payoff period? Does the demand go away and you are back to LTR before you recouped your investment into furnishings?

JD Martin · Answer

I don't charge anything extra. I don't offer the option to unknown tenants with unknown histories to me, and for those tenants that successfully conclude the only non-M2M lease I offer (one year, at the beginning of your tenancy), I transfer them to M2M without penalty.

I *want* M2M tenants. You can get rid of them easier and raise the rent easier. They can leave when they want to easier. It's really the best of all worlds for everyone. But I'm not going to do a M2M on a new tenant unless I have the place set up like a STR. So in your case, where you are talking about providing a STR, that's a different conversation and there's usually anywhere from a 50-200% markup or more compared to a LTR. IE if you can rent the place empty for $1k per month you shouldn't be getting less than $1500-2000k as a furnished, utilities-provided rental.

How much extra should you charge for a month to month lease?

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