Hello! It's been a while which generally speaking means things have been going well! My tenants lease expires the end of April. They have been excellent tenants and I hate to see them go. Recently, however, they contacted me and asked if next year's lease can be month to month with a 120 day move-out notice clause. One of them has been offered a job in Charlotte, NC but doesn't know exactly when he will have to move. He's been told it will likely be 6 months from now at a minimum and he will have at least 90 days notice after that before he has to be there. He will be the GM of two hotels that aren't even built yet. Thus the un-exact timeline.
I've already decided I'm going to do it because frankly, I'd like to keep these folks as long as possible. However, I'm unsure on a couple things. 1. How to re-write the lease to be month to month (I need to pull it out and read it before asking this because it may be pretty self-explanatory once I re-read the thing.) and 2. is there a surcharge typically expected on a month to month lease? My current rent is 1595/month and the lease has written into it that the rent will go up 5% (I think) each year. So... should I just raise the rent 5% or more because he wants to go month to month?
Thanks for listening to me ramble. I appreciate the help.
I personally charge $300 more for month to month. It is written in all of my leases that they go month to month if no renewal occurs at a $300 a month increase. Hope that helps.
@Jason Krawitz -- Good to hear you have great tenants and I agree with your logic. Some points:
- Re-writing the lease: Since it's the same tenants, I recommend an addendum/extension. You won't have to worry about the security deposit and re-writing a bunch of the clauses. Your addendum should outline that it's now a month-by-month with 120 day move-out notice clause.
- Rent Increase: I'd increase it to the new annual rate (5% increase) that you were anticipating, but then hold it constant. I wouldn't continue to increase it each month, although I'd write the lease in such a way that you get the option to increase it if you want to (since they're not signing an annual contract).
- Seasonality / timing: Since winter is one of the worst moving times, look on the bright side! This month-by-month may get you on a summer cycle for your next 12 month lease, which brings greater demand.
Hope that helps!!!