Month-to-Month vs 12 Month Leases for SFH

[Daniel Cordoves]

Hey everyone,

I'm about to close on a 5 bed / 3 bath property that I'll be house hacking. My plan is to rent out the rooms individually while I live in one of them.

Here's where I need some guidance: I'm planning to move out in about a year. 

When I do, I’m strongly considering converting the property from a rent-by-room setup into a traditional single-family rental.

Because of that, I’m debating whether I should:

1. Put tenants on month-to-month leases

2. Use 12-month leases

3. Or maybe something in between (6-month? staggered terms?)

My thought process:

• Month-to-month gives me flexibility when I’m ready to convert to a single-family rental.

• But long-term leases provide more stability and potentially better tenant quality.

Any advice or insight would be greatly appreciated!

[Rick Albert]

The challenge with month-to-month is timing. 

What if the tenant moves out in November, which may be a horrible time to rent out later on? Now you are stuck with a vacancy for months versus if they move out during Spring or Summer it could make sense.

You also have to factor in wear and tear. Are you including furniture? If not, that's furniture moving in and out often that could cause damage. Yes you have a deposit but why deal with the headache?

I would consider a compromise. Something like minimum 3 months and you require a 30-60 day notice before moving out. That way you get some stability by keeping the vacancy lower and you have time to plan and advertise the bedroom.