Yearly Lease vs Month to Month?

Question

I have an inherited tenant whose 1 year lease is ending from previous landlord.  Do I have the option now to offer a month to month (tenant at will) lease or do I have to carry the existing 1 year lease terms? (but with rent increase of course)

Is it in landlords best interest to have a lease vs a tenant at will agreement?  I am not 100% pleased with tenant but they do pay the rent.  I am leaning toward month to month to keep my options open just in case I want to evict..  Does this make sense?

John Teachout · Answer

We initially require a one or two year lease. On renewal we will sign another one or two year lease. If the tenant wants month to month, at the end of the lease, we allow that but at a higher price since there is more uncertainty for us and the house could become vacant at a difficult to rent time of year. The upcharge for M2M is usually $20.

Ryan Wamsat · Answer

@Stephen Neto,

As with everything, the answer is "it depends".  As a landlord, I lean towards a yearly lease.  That gives me a sense that I will not have to look for another tenant for at least another year, and that the rents will keep coming in (hopefully).  However, I have a month-to-month agreement in place on one unit that I had planned to sell.  Having the M2M allowed me to pick a good time to sell, instead of forcing me to wait until the lease had expired.

Personally, if the tenant is not too much trouble for you, I would suggest going with the year lease.

Side note: You can evict regardless of the type of lease.  However, you must have good reason to evict.  I think you're referring to the termination of tenancy.

Good luck to you,

Ryan

Alan Grobmeier · Answer

@Robert Fornwalt, it depends on the laws of the state.  For example: In AZ you are pretty much out on your ear 21 days after eviction proceedings are began.  It doesn’t matter if month to month, yearly leases, or anything else.

From what I understand, in some blue states, they MAY let the tenant stay despite non-payment.  These are usually confined to snowy northern states where moving in January is somewhat problematic and can be dangerous.

Check your state laws to see what your state does.

Best of luck!

Robert Fornwalt · Answer

is it easier to evict on a month to month? it also seems that if a tenant really wants to leave it would be easier for both tenant and landlord on a month to month.

Nathan Gesner · Answer

I prefer a one-year lease. I also renew tenants on a one-year term. I have a very strong lease that ensures they pay a penalty if they break the one-year lease which typically puts extra money in my pocket. If the tenant wants to stay month-to-month, I allow it with a 25% increase to the rent. Yes, people pay it.

If your tenant is so risky that you want to keep them on a month-to-month, then that's an indication they're not a very good tenant and you should replace them as soon as possible.

Some state laws make it difficult to end a lease so month-to-month may be a better option.

Peter Tverdov · Answer

Check with your states laws but usually 30 days. We just on-boarded a 3 family property for a client on all MTM Leases. We'll begin issuing rent increases at the end of month to go into effect Dec 1st

Jean Wilner Wilner · Answer

I will be inherited a month to month rent where I have to raise the rent. Can I ask to go on a yearly or do I just continue the month to month? As I am inherited the tenant how long in advance do I give the rent increase notice?

JD Martin · Answer

I don't rent to anyone who won't initially sign a one year lease (which is shorter if they rent after September). When the lease is up I convert to M2M unless they have been good tenants that specifically request another one year lease.

Generally M2M is better for the landlord but I like the initial one year in order to lock unknowns into some reasonable obligation. They may still leave but you have some recourse, even if it's unlikely you'll ever collect. Besides, anyone that won't sign an initial one year lease is probably highly unstable.

Your question: once the inherited lease terms are up you will default to the lease terms for holdover, or your state's laws if your lease doesn't specify.

Hubert Kim · Answer

Some or all of your answers may depend on your local and state laws regarding tenancy. For example, in California at the end of a residential lease, the landlord may not require a new lease, allow the lease to go month-to-month, or simply not renew the lease at all. However, under rent control in City of Los Angeles, once a lease expires for a non-single family residence, it automatically goes month-to-month and the landlord may not evict without cause.

If you have the option to continue month-to-month, again depending on your local regulations, this may provide you with flexibility in the case you would like to terminate tenancy. Normally, the original lease terms will apply.

On the other hand, you may also decide you want a new lease of a defined length with different terms and offer it the the tenant as well. Hope that helps.

Yearly Lease vs Month to Month?

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