Tenant wants to go month to month

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Tenant wants to go month to month

Patti L.
Beaverton, OR · Member since 2016 · 16 posts · 2 votes

My tenant's lease is up on Nov 1. He just told me he's looking to buy his own house and asked to go month to month. Are there good alternatives that is fair to both parties? I was thinking of proposing month to month with 60 day notice. We're in Portland OR a fairly competitive market although slowing down. I doubt he is going to find something overnight, but I guess you never know. TIA

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Mike Dymski
Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes
9y

This reminds me of a term I occasionally hear called mindshare and it has to do with our mind's capacity to only focus on so much.  When your mind is focused on one thing, other items fall by the wayside.  I'd recommend keeping things simple and systematized and have a month-to-month renewal at $x premium and $y rent for your regular one year lease (or just do long-term leases).  It keeps down the mental drain from constant decision making, keeps you out of situations where you accept terms where you end up second guessing yourself, it keeps lease renewals occurring at opportune seasonal time periods and it properly manages turnover.  The relationship with you and the tenant becomes unbalanced when they delegate their personal planning to you and you end up losing six months of profit with a vacant unit during the holidays.  The lease can accommodate them and that is a month-to-month arrangement at a premium rent (or simply do only long-term leases).  This is customary and a win win for everyone.  Short-term rentals are a different business model.  Hope this helps.  Good luck with your decision.

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  • Eric Bowlin
    Investor · Plano, TX · Member since 2014 · 145 posts · 102 votes
    9y

    I'd say do a 60 day notice requirement and raise the rent. A lot of apartment complexes raise the rent a good 30%+ for a month-to-month.

    If he says no and moves out, do you really lose anything? He is moving anyhow.

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  • Account Closed
    Real Estate Agent · Las Vegas, NV · Member since 2015 · 2k+ posts · 1k+ votes
    9y

    some states only require a month to month to give 30 day notice ,if he is a good tenant why not give them a month to month .as you said it is a hot market so it might take them a long time to find a place and you will not have trouble renting  Even if you sign a yearly lease when someone they still are not guaranteed to stay for a full year  

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  • Mike Dymski
    Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes
    9y

    This reminds me of a term I occasionally hear called mindshare and it has to do with our mind's capacity to only focus on so much.  When your mind is focused on one thing, other items fall by the wayside.  I'd recommend keeping things simple and systematized and have a month-to-month renewal at $x premium and $y rent for your regular one year lease (or just do long-term leases).  It keeps down the mental drain from constant decision making, keeps you out of situations where you accept terms where you end up second guessing yourself, it keeps lease renewals occurring at opportune seasonal time periods and it properly manages turnover.  The relationship with you and the tenant becomes unbalanced when they delegate their personal planning to you and you end up losing six months of profit with a vacant unit during the holidays.  The lease can accommodate them and that is a month-to-month arrangement at a premium rent (or simply do only long-term leases).  This is customary and a win win for everyone.  Short-term rentals are a different business model.  Hope this helps.  Good luck with your decision.

    2Reply
  • Deanna McCormick
    Minneapolis, MN · Member since 2013 · 2k+ posts · 1k+ votes
    9y

    I'd agree to let him go on a month to month lease term, You can raise the rent a bit to do a M2M lease.

    He'd only be required to give you a 30 day notice but you could request that he gives you a 60 day notice in the new lease term it's works for me and then I have more time to get new tenant in.

    I personally do all my leases M2M and ask for 60 day notice, I also say I will keep the lease rate the same for 12 months. I charge a redecorating fee of $250.00 if they stay less than 6 months. Usually my tenants stay 2 to 3 years and I don't have much turn over, but I'm a smaller property so I track my property and tenants well, and my units are small and easy to rent. 

    The property I managed had an additional m2m lease fee of $60.00 a month, if they didn't resign for a full 1 year term. 

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  • Steve Moody
    Portland, OR · Member since 2008 · 123 posts · 73 votes
    9y

    If he's been a good tenant I'd just allow him to go month-to-month and ask they he gives you 60-days notice. You have no way of knowing if he's ready to buy and will move in 60-days, or would really like to buy but will be renting for another year or more. I wouldn't start looking for new tenants with plans to kick him out, I wouldn't try to raise the rent any more than you were planning to at the end of the lease anyway (you were right?). A few bucks extra per month will be wiped away with vacancy anyway. 

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  • JD MartinBusiness Member
    Moderator
    Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
    9y

    At the end of a lease we let tenants that don't want to sign a new lease go month to month, but there is a corresponding increase in rent that goes with going M2M (generally 10%). Then, if the tenant decides to leave in November, for example, a tougher time for us to rent, we've collected 4 or 5 months of a higher rate to compensate (all of our leases end in the summer). That's fair to both parties. No tenant wants to go M2M unless they think they will either have financial trouble or believe they will be moving before a lease is up, so getting the M2M signal from the tenant tells us that we should plan for having to list that unit at some point in the not-too-distant future. 

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  • Patti L.
    OP
    Beaverton, OR · Member since 2016 · 16 posts · 2 votes
    9y

    Thank you all for your responses! It's very helpful to see the range of how various landlords would handle this situation. I hope this type of thing will get easier as time goes on and I'm able to refine my own rules and policies a little more. 

    1Reply
  • Thomas S.
    Member since 2016 · 13k+ posts · 12k+ votes
    9y

    All my tenants are M2M. I prefer the control and find that M2M tenants are far more communicative than lease tenants. Lease tenants leave with very short notice if they are breaking the lease, some times a midnight run, where as M2M tenants will almost always give you several months notice.

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  • Johann Jells
    Rental Property Investor · Jersey City, NJ · Member since 2011 · 1k+ posts · 876 votes
    9y

    We've always let tenants go M2M after 1 year. We get 30 day notice either way so it makes no difference, and if you're lucky that Nov lease end will move out in the warm months that are better to lease. I'm in a pretty good market, so a unit in good shape often rents with no vacant month. I often have leaving tenants telling me they have friends that want it!

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  • Neal Collins
    Developer · Portland, OR · Member since 2014 · 732 posts · 490 votes
    9y
    Deanna McCormick A redecorating fee of $250 if they stay less than 6 months is brilliant! Fun tip, I'm going to add that to my bag of tricks. I full heartedly agree with Johann Jells about why you would want to roll it in a m2m. November is a terrible time to place new tenants with bad weather and the holidays looming. Put a premium on the m2m and hope that the tenant moves out in May!
    1Reply
  • Benjamin Ficker
    Real Estate Broker · Portland, OR · Member since 2013 · 43 posts · 22 votes
    9y

    Interesting all the thoughts on how much notice you have to give from people in completely different markets... If the property is in Portland, you HAVE to give a 90 day notice no matter if it is a month to month, raising the rent, or whatever (except for an eviction for cause).

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  • Jeff B.
    Buy & Hold Owner · Redlands, CA · Member since 2015 · 5k+ posts · 2k+ votes
    9y

    I've run my 6-plex for 19yrs on a 3 month lease, holding over m2m.  Several tenants have stayed 5 yrs and more.

    Frankly, IMO, the yearly lease gives the advantage to the tenant and zero protection to the landlord.

    0Reply
  • Nathan MillerPro Member
    Property Manager · Grants Pass, OR · Member since 2009 · 429 posts · 201 votes
    9y

    I agree with Eric, 60 day notice requirement and increase the rent to a month-to-month rate.

    0Reply
  • Patti L.
    OP
    Beaverton, OR · Member since 2016 · 16 posts · 2 votes
    9y

    @Nathan Miller since you're in Oregon ... do you know the correct way to add 60 day notice into the rental agreement? And is it even possible? Someone responded to another question I had and said that "regulations usually trump lease language". I did read in Oregon standard notice is 30 days on a M2M. Does this mean that under no circumstances I can require 60 day notice on a M2M ... even if the tenant agrees to it in writing? 

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  • Jennifer T.Pro Member
    Investor · New Orleans, LA · Member since 2014 · 1k+ posts · 944 votes
    9y

    I've lost two great tenants because they bought their own homes.  As a LL, it's a bummer to lose a good tenant!  But as a person, it's good to see great people doing well in life and moving on.

    I allowed both of them to go to a month-to-month, with at least a 30-day notice.  In return, both sets of people kept me informed of what was going on in their home buying process and also allowed me to conduct showings when they were in their final 30 days.

    In fact, one set of tenants (had rented the other side of my personal duplex) moved one street up and one street over, so they are still my neighbors and I run into them on occasion.

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  • Patti L.
    OP
    Beaverton, OR · Member since 2016 · 16 posts · 2 votes
    9y

    @Account Closed -- thanks so much 

    1Reply
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