Month to month vs year lease or 6m lease

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Month to month vs year lease or 6m lease

Susan Clark
Investor · Palmyra, NY · Member since 2015 · 98 posts · 29 votes

I have property in WESTERN NY. My tenant of one year is asking to go to a mo th to month lease. I know she’s wanting to move. Wht are pros and cons to 1yr leases and month to month. I’m leaning towards a 6months lease if ThTs even allowed. What’s your experience.

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Nathan GesnerBusiness Member
Moderator
Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
5y
Originally posted by @Susan Clark:

I’d love to hear more detail about early lease dismissal.

I sign them on a one-year lease. If they want to leave early, they have to pay do three things:

  1. Submit notice 30 days prior to departure OR pay rent for 30 days whether they occupy or not.
  2. Pay a termination fee equal to one month of rent. This is paid on the day they give notice, not at a later date and certainly not after they leave. Do not use the security deposit for this!
  3. Allow us to market and show the rental during their last 30 days.

In most cases, we find a new renter before the original renter leaves. This means we have almost no vacancy and we received an extra month of rent as the termination fee. In over 80% of the cases, the Landlord makes more money.

What if the tenant refuses to pay the fee? Just follow the law and hold them accountable for rent, utilities, and other responsibilities until a new tenant is placed. If they move out and it takes you 30 days to find a new renter, charge the original renter for 30 days of rent.

It's rare that we lose money when a tenant breaks their lease early.

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  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    5y

    There are pros/cons to both. I think it really comes down to your state laws and your skill is a Landlord.

    I prefer a one-year contract. It provides stability and I can predict the future a little better. I also have a great process for early terminations that usually earns the Landlord extra money. And if a renter wants to go month-to-month with me, I only allow it at a 25% increase, which also brings me extra money.

    Month-to-month is good if you are in a state where evictions are difficult. If you may have a difficult time dealing with difficult tenants, the M2M works great because you just give them notice and they leave 30 days later (or whatever your state requires).

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  • Susan Clark
    OP
    Investor · Palmyra, NY · Member since 2015 · 98 posts · 29 votes
    5y

    @Nathan G.thanks so much for your input. I agree with your idea of stability with a 1yr lease and I agree with the ease of month to month in my state what we ictil s are a nightmare and getting worse everyday. I’d love to hear more detail about early lease dismissal and I like the idea of saying yes you can go month to month for a 25% rent increase although o fear NY may not allow that increase. I mean right now I’m NY you can put anything in your lease and they sign but the tenant can do anything they want. We have a rent moratorium and I have some tenants paying $200-$400 less than their lease agreement and I can’t do anything about it but I still have to maintain repairs and pay my mortgages. Thanks again for the input

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  • Tracy StreichPro Member
    Real Estate Broker · Tulsa- OKC Oklahoma · Member since 2017 · 868 posts · 801 votes
    5y

    MTM in the winter is not a bad idea.   If they move in 3 months then you are renting in the Spring and typically get higher rents.  Also you can non renew to get the tenant out as opposed to evict which is nice right now with all the Covid restrictions. 

    [email protected]918-728-8080
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  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    5y
    Originally posted by @Susan Clark:

    I’d love to hear more detail about early lease dismissal.

    I sign them on a one-year lease. If they want to leave early, they have to pay do three things:

    1. Submit notice 30 days prior to departure OR pay rent for 30 days whether they occupy or not.
    2. Pay a termination fee equal to one month of rent. This is paid on the day they give notice, not at a later date and certainly not after they leave. Do not use the security deposit for this!
    3. Allow us to market and show the rental during their last 30 days.

    In most cases, we find a new renter before the original renter leaves. This means we have almost no vacancy and we received an extra month of rent as the termination fee. In over 80% of the cases, the Landlord makes more money.

    What if the tenant refuses to pay the fee? Just follow the law and hold them accountable for rent, utilities, and other responsibilities until a new tenant is placed. If they move out and it takes you 30 days to find a new renter, charge the original renter for 30 days of rent.

    It's rare that we lose money when a tenant breaks their lease early.

    The DIY Landlord Book4.7248 Reviews
    WebsiteView Page
    2Reply
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