Lease Renewal vs Month to Month

Member since 2025 · 4 posts · 8 votes

I would like to get some investors' opinions on the pros and cons they have experienced on renewing a tenant's lease or just letting them go month to month. If you have a good tenant and don't want them to leave, does it make sense to do a renewal and risk them denying the renewal and even potentially moving out because of that?

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Jarred Sleeth

Investor · Austin, TX · Member since 2014 · 142 posts · 84 votes

I generally preferred renewing good tenants because predictable occupancy is worth a lot more than preserving maximum flexibility.

Offering a renewal doesn’t have to force the tenant into a decision to leave. You can ask about their plans first, offer another fixed term, and explain what happens if they prefer month to month. I’d also consider when the new lease would expire. Avoiding a vacancy during the weakest rental season can matter as much as the rent increase.

Month to month makes more sense when you expect to sell, renovate, or are not yet confident you want the tenancy to continue. Otherwise, I’d usually take the stability of a renewal.

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Michael K GallagherBusiness Member
Real Estate Agent · Columbus OH · Member since 2018 · 1k+ posts · 1k+ votes
1w
@Nate F. I generally renew the lease, if its a good tenant I try to make it at the same rent or a very nominal increase with evidence of an increased expense or something similar. Vacancy and filling a unit is expensive, keeping a solid tenant locked in is a big benefit. In general the benefit the Tenant gets is their cost of living locked in or housing rather for another year. if its MTM, you can in theory raise the rent with 60 days notice in most cases.
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Caleb Brown
Real Estate Agent · Kansas City · Member since 2018 · 4k+ posts · 3k+ votes
1w
Renewing is ideal. MTM is good for when you sell or if you plan on doing renovations. If you have a solid tenant then I would lean on doing a long term lease.
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Ryan SpathBusiness Member
Real Estate Agent · Boise, ID · Member since 2017 · 553 posts · 370 votes
1w
Personally I like the annual leases. Here in Idaho during the winter if we have a tenant leave we can expect less rent that we can get in the spring/summer months. When you have a twelve month lease it provides more certainty IMO. We have a two month rent lease buy out if a tenant needs to break the lease for whatever reason. If this is something you do be sure to check your local laws and make sure it is legal and you are compliant.
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Richard F.
Honolulu, HI · Member since 2008 · 3k+ posts · 2k+ votes
1w
You must always perform an annual inspection of your property checking for signs of leaks or other problems on the horizon; renewal time is the best excuse to do so. You can evaluate the care your tenant is providing, and take the opportunity to ask of their intentions...do they love it there, or are they planning to move with some target date in mind? You should also update the documentation of their income source, change or addition of vehicles, and take note of how many people appear to be living there. You inform them you will be checking the local rental market, and get back to them within a few days with a renewal offer based on all of your findings.
You can certainly take this opportunity to adjust the term of the agreement, so the end date is more in your favor for timing of the year, but unless you need to change other terms or conditions, all that is needed is a one page addendum. Tenants rarely decide to move over a reasonable increase. It's when you make a big jump to catch up that they will bolt. Of course, sometimes they just need a bigger, or smaller, place and move anyway.
My agreements always started with a six month term, that, if tenants and I were happy, I guaranteed I would renew at same rate and terms for a full year initially (providing 18 months of stability initially), then go through this process annually. If, at the inspection, they advise that they plan to move, I may let them roll month-to-month to reach their target date. Our rental agreements all automatically reverted to month-to-month until new agreement or addendum was signed.
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Jarred Sleeth
Investor · Austin, TX · Member since 2014 · 142 posts · 84 votes
1w
I generally preferred renewing good tenants because predictable occupancy is worth a lot more than preserving maximum flexibility.
Offering a renewal doesn’t have to force the tenant into a decision to leave. You can ask about their plans first, offer another fixed term, and explain what happens if they prefer month to month. I’d also consider when the new lease would expire. Avoiding a vacancy during the weakest rental season can matter as much as the rent increase.
Month to month makes more sense when you expect to sell, renovate, or are not yet confident you want the tenancy to continue. Otherwise, I’d usually take the stability of a renewal.
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Leo SteinBusiness Member
Property Manager · Orange County, CA · Member since 2025 · 13 posts · 1 vote
1w
With a good tenant, I don’t treat this as an automatic either/or. I look at the lease language, local notice and renewal rules, and my operating calendar. A fixed renewal gives budget certainty and lets you schedule inspection and turn work; month-to-month gives flexibility but can create surprise vacancy and more frequent notice/rent-change admin.
Whatever you choose, document the terms clearly, give notices on time, and don’t promise a renewal until you’re sure. For a property I’m planning to sell, refinance, or renovate, I’d value flexibility. For a stable hold, a fixed term is usually easier to underwrite. Local rules and the tenant’s history should drive it.
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Patrick O'SullivanBusiness Member
Property Manager · Phoenix, AZ · Member since 2024 · 521 posts · 193 votes
1w
If they’re a good tenant, I’d lean toward renewing. I’d rather have the certainty of knowing the property is occupied for another year than the flexibility of month-to-month, especially if the lease expiration can be timed for a stronger rental season. I also don’t think offering a renewal necessarily pushes a good tenant to leave. You can always have a conversation first and see what their plans are. Month-to-month makes more sense to me if you’re considering selling, renovating, or otherwise need flexibility, but for a long-term hold with a tenant I want to keep, I’d usually choose the renewal.
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Michael Eskenasy
Investor · Pacific Northwest · Member since 2026 · 511 posts · 286 votes
1w
For a genuinely good tenant, I’d usually favor a renewal over letting the lease drift month-to-month.

The reason isn’t just rent certainty. A strong tenant reduces vacancy, turnover, make-ready costs, leasing time, and the operational noise that comes with replacing someone. If the economics still work, preserving that relationship can be worth more than squeezing for maximum rent.

Where month-to-month makes sense is when you intentionally want flexibility — maybe you’re considering selling, renovating, changing strategy, or you’re not yet sure you want another full-year commitment.

The mistake is treating this as only a “rent increase” decision. I’d compare the value of another year of known occupancy against the real cost and risk of turnover.

That’s how our system looks at it: preserve the good operating state unless there’s a concrete reason to change it.

Feel free to connect if you want to compare the economics on the specific unit.
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Kate Sanchez
Member since 2025 · 240 posts · 97 votes
6d
@Nate F. Great insights here! While locking in stability with a fixed lease is ideal, pushing a great tenant too hard on renewals can backfire. Often, a modest adjustment or letting them ride month-to-month beats the high cost of a vacant unit.
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Drew SygitBusiness Member
Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
6d
The benefits of MTM are overblown.
Most of the perceived benefits can be covered with well thought out lease clauses.
Also, many states have landlord benefits tied to 12- month leases (i.e. Michigan only allows landlords to charge tenants for maintenance if minimum 12-month lease)
RENEWAL PROCESS:
1) 90 Days before Lease Expiration:
- Send renewal reminder:
--- State current rent, market rent and ask how much of an increase they think is fair.
--- Make any renewal contingent on inspection results
--- Let them know going MTM will be a 10% increase
- Schedule inspection to make sure taking care of property and you WANT to renew them
2) 70 Days before Lease Expiration:
- Send renewal reminder: state current rent, market rent and ask how much of an increase they think is fair.
- Let them know going with MTM will be a 10% increase
NOTE: you should have done inspection by now!
- Do NOT send 2nd renewal notice if you do not want to renew due to condition of the property, unapproved pets or additional occupants.
3) Make sure you've recently reviewed your lease and updated with any new legal requirements or lessons learned.
4) Most tenants will offer a decent increase.
- You may have to prod some to bump their initial amount - be a good salesman!
- Roughly 20% will state they can't afford an increase. Most are lying!
Give them a number YOU think is fair (NEVER $0 for these types!) and politely tell them that if they truly can't afford this increase then please send updated paystub(s) to prove. Most will not send and will accept increase or move (good riddance!).
5) If tenant wants to go MTM, add lease clause that states that if they have not given 30-Day Notice by Sept 1, their lease will automatically extend until February 28.
- This discourages MoveOuts during Fall/Winter, the worst months for finding new tenants.
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Marcus Auerbach
Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes
6d
The benefits of 1 year renewals are overblown - let me make the counter argument to Drew's philosophy.

If a tenant wants to move, they will move.

Good luck holding them to the lease. What are you going to do? Sue them and spend more money in court than the lease was worth?

You can make a case for apartments, but if you are renting SF like we do, just renew them into a MTM. It makes it a lot easier to get rid of a tenant who has turned bad. A break-up or job loss can turn a good tenant into a bad one quickly. MTM gives you flexibility to end the lease clean.

The risk of tenants moving out in the winter is close to zero. After 15+ years of renting in Milwaukee I had almost zero move outs in the winter. They generally don't want to. And no real problem filling vacancies, even though it is slower, there is also almost no inventory on the market to compete with.

PS: I absolutely agree with regular routine inspections: last week I got called to look a water heater and found that the condensate line for the AC had so much algae that it did not drain. The house felt humid and there were at least 5 gallons of water inside the AC. Took 5 minutes to wash out, could have caused thousands of damage if unattended. We do annual, but depending on your property you might want to do semiannual. Also a good way to check the general condition and provide some maintenance training for tenants
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- Drew SygitBusiness Member
  Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
  5d
  I can see your point!
  So far, our lease has been tight enough to get rid of unwanted tenants via 30-Day Notices for lease violations and have them stand up in court when tenants want to test them.
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Rachid AbadliBusiness Member
Investor · Sacramento, CA · Member since 2024 · 125 posts · 33 votes
6d
Nate — I run both strategies across my units, and the answer really comes down to what you're optimizing for.
Fixed-term renewal gives you income certainty and protects you from seasonal vacancy (nobody wants to find a tenant in December in Louisville). It also locks the tenant in — they can't just give 30 days and bounce during your worst turnover month.
Month-to-month gives YOU flexibility. If you're thinking about selling, doing a major renovation, or moving a family member in, MTM lets you act on 30 days' notice in most states.
Here's the thing people miss, though: the compliance obligations change between the two. In many jurisdictions, rent increase notice requirements are different for MTM vs. fixed-term. Some states require 60–90 days' notice for MTM rent increases but only require whatever the lease says for renewals. Kentucky requires 30 days for MTM termination by either party — but your lease terms govern during a fixed term.
My approach: I renew good tenants on 12-month leases with a clause that converts to MTM after expiration. Best of both worlds — I get the stability of a fixed term, and if they stay past expiration, I get the flexibility of MTM without having to chase signatures.
One thing I'd add to what others have said: whatever you choose, make sure you're tracking the notice deadlines. I missed a renewal window once because I lost track of the dates and ended up in an awkward MTM situation I didn't want. Now I set reminders 90 days before every lease expiration.
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Gregory Chadwell
Real Estate Broker · Milwaukee, WI · Member since 2015 · 299 posts · 90 votes
6d
In my experience i found that renewing on a MTM with a modest or no increase you feel that the renters will stay put. Not always the case. They then inform you they bought a house in the hardest months to re-rent (like December) and you're kicking yourself in the butt with refresh costs and 2mos of vacancy. I give them a notice approx. 70 days before lease termination and 10 days to make a decision with 3 options. 1. Rent for another year at a modest increase, 2 Rent for MTM with a substantial increase, or 3 move out at the end of the lease. Most apt managers only renew for a year or charge a substantial increase for "Holdover" tenants

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Alexis DeAngelisBusiness Member
Property Manager · Raleigh, Raleigh-Durham area · Member since 2025 · 50 posts · 37 votes
6d
With renewal or going month to month, I try and follow the same leasing "laws" apartments do. Every year there is an increase but it could be as small as $5/month. I also ONLY do 12 month leases, so it makes i easier to increase every year. Also, on a month to month lease, we charge a $500 "fee"/month to be on month to month becuase there is only a 30 day notice required so it kind of gives us a little bit of extra income during the time when they re "unsure" of renewing or going month to month. If that makes sense. Sorry for the rambling :-) Hope this helps and have a great evening!
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Kyle HendricksPro Member
Lender · Member since 2021 · 170 posts · 74 votes
5d
I like to renew if possible. But I also ask them their plans, if they see it being long term, etc. Worst they say is no, and then you get MTM which is what would have happened anyway. This way at least they can give you a heads up if they are not planning to stay a full year you can at least plan for it and have advanced notice. In tr and keep good lines of communication with all my tenants.
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Rachid AbadliBusiness Member
Investor · Sacramento, CA · Member since 2024 · 125 posts · 33 votes
4d
I do 12-month leases that auto-convert to month-to-month after expiration. Best of both worlds — you get the stability of a fixed term, and if the tenant is great, it rolls to MTM without forcing a renewal conversation that might spook them into shopping around.
The key is tracking your lease dates. The worst feeling is realizing a lease expired 3 months ago and you never sent a renewal notice. Set calendar reminders or use PM software that alerts you 60–90 days before expiration so you can proactively reach out with a renewal offer.
For the actual decision: if your tenant is paying on time and taking care of the place, don't overthink it. A reasonable $50–75/month increase at renewal rarely causes a good tenant to move. Moving is expensive and painful — first/last/deposit on a new place, hiring movers, setting up utilities, changing address everywhere. Most tenants know that math.
Richard's right above — tenants rarely leave over a reasonable increase. They leave over poor maintenance response, feeling disrespected, or life changes you can't control. The renewal conversation is actually a great touchpoint to ask, “Anything need fixing?” That five-minute call can save you a $5,000 turnover.
One tactical tip: time your lease expirations for spring/summer (April–August). If a tenant DOES leave, you're filling the vacancy in peak rental season instead of December.
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Adam BartomeoBusiness Member
Real Estate Broker · Cape Coral, FL · Member since 2015 · 2k+ posts · 1k+ votes
2d
In todays market you should always have an annual lease. It locks that tenant in to the agreed rent and secures the property, avoiding vacancy. When you have a bad tenant you want them on a M2M so if they mess up you can get rid of them quickly. Good tenants, annual leases to lock them in.
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