Month to Month vs. Long Term Lease

[Sean Smith]

Hey BP

*Sacramento and Bay Area Market* 

I recently had a conversation with a buy-n-hold investor about his rental properties. To my surprise, he prefers month to month agreements over a typically stable 6 month or year lease. 

His reasoning: 

1. Sacramento (and California in general) is a very hot rental market. He has a massive waiting list for all his properties, so almost no vacancy at all. His list contains people from all over Sacramento, and even areas like San Jose, San Francisco, and Oakland.

2. If the tenant is troublesome he can serve a 30-day notice to vacate. A year lease, which is typically preferred, actually works against him in the case of bad tenants and strict Californian landlording laws.

What are your thoughts? Which do you prefer in your rentals?

[Jack B.]

Originally posted by @Samantha Klein:

Term lease only benefits the tenant. Tenants will leave whenever they want and break a lease leaving you without proper notice. M2M benefits the landlord due to the ease of getting bad tenants out faster and plus if your having a whiny tenant who doesn't seem happy, you have the ability to give proper notice and get a better tenant. 

 Exactly. I was super glad I learned this lesson reading a blog from nononsenselandlord and converted leases to MTM as they expired and only did MTM leases after that. Saved my butt just last summer. Tenant is a PITA? Here is your 20 day notice to vacate...