Month to month leases vs. annual

[Michael H.]

Last month I purchased five duplexes. Seven of the ten units are month to month leases. I'm looking my to raise the rent for these seven immediately as they are $200-$300 a month low for the area. I'm considering having them sign month to month leases vs a full year lease to give me more flexibility in raising rent and not losing too many tenants at once. What are the pros and cons you've seen of month to month vs yearly?

[Thomas S.]

When you have a good screening system and good tenants M2M is preferred. 

There are no advantages to a term lease with good tenants and only disadvantages with bad ones.

With a term lease your tenants control the property with a M2M you are in control. Duration of lease has no bearing on how long a tenant will stay or when they will leave. M2M or term they always leave when ever they choose to go. The plus of a M2M is they will give you plenty of advance notice when they are leaving where as when breaking a term lease they will tell you last minute or not at all.