Monthly rentals? How much should I raise the rate?
I have a tenant that has been in a lease for one year. he is building a house but is unsure when it will be complete so he wants to go to an month by month lease or possible an 6 month lease. should I raise the rate and what percentage? or should I just stick to the one year?
The monthly rent is based on the current market in your area. Look at comps in your area and decide if a raise is in order or not. Some landlords charge more for the flexibility of doing MTM but personally I don't see the point. If people want/have to bail, they do and you wont see a dime of your long term lease commitment they flaked out on. I only do MTM..... allows me to kick anyone out at any time.
Check you market and decide
That makes since. Thank you for your advice.
#1 Private Lending Contributor
- Lender
- The Woodlands, TX
Quote from @Ned J.:Well, can’t say I agree. Most tenants I’ve had would try to reach a compromise/settlement with me when they wanted to break their lease. In most areas I’ve owned residential properties lease breaks without settlement get reported and the tenant would have a hard time obtaining a new lease for a decent apartment. I also found small claims court to be effective. But my properties were/are higher end rentals, so maybe it’s the financial position of the tenant that’s a determining factor.
The monthly rent is based on the current market in your area. Look at comps in your area and decide if a raise is in order or not. Some landlords charge more for the flexibility of doing MTM but personally I don't see the point. If people want/have to bail, they do and you wont see a dime of your long term lease commitment they flaked out on. I only do MTM..... allows me to kick anyone out at any time.
Check you market and decide
in answer to the OP’s question, if a tenants lease expired and he wanted either a month to month or a 3 or 6 month lease, I would tend to do the following:
in a very weak rental market I would be inclined to keep the rental rate the same.
in a normal to strong market I’d charge 10-15% more monthly on a 6 month lease, 20-30% more on a 3 month lease, and 35% more for month to month.
in a very strong market I would do a competitive rent survey and let that guide me.
