Yearly lease agreements are standard among most landlords and easy enough to begin entering with a free rental application. A lease will generally detail the rent that must be paid each month and how long the tenant is expected to remain in the building, as well as any policies on smoking, pets, and other particulars. The purpose of this is primarily to protect the landlord, although it would be disingenuous to say there aren’t any advantages for tenants.
An advantage to leasing for tenants is the freedom to customize their living space. They know precisely how long they’ll be staying on the property, and they can plan decorations accordingly. They also effectively “own” the space in that even if a landlord finds someone who is willing to pay more for the living space, they have to keep the original tenant. The landlord is also responsible for maintenance during the time of the lease—a big plus for tenants. All this said, there are benefits for a month-to-month approach for both tenants and landlords.
Likely the most common reason a tenant would prefer a month to month agreement is the ability to move whenever they need or want to. They also have the ability to do this on relatively short notice, typically just 30 days in advance in most states. This also works for landlords. In a traditional lease agreement, outside of filing for an eviction, a tenant stays in the property for the duration of the lease. With a month to month agreement, a landlord can choose to give a disagreeable tenant a 30 day notice to vacate the property. This can be a great incentive to keep tenants in line.
Outside of there being no specific end date for a month to month agreement, there are more benefits that could make this appealing for tenants. An agreement of this nature offers tenants temporary housing when they need it. For example, a month to month agreement can be great for someone moving to a new area and looking for a permanent home. They can also be a superior option to hotels when going through pest removal or extreme renovations. These temporary arrangements can also be an advantage for landlords who need to fill a short-term vacancy. Some rent is always better than none, after all.
A huge advantage for landlords to enter a month-to-month agreement is that they generally get to charge more in these cases. Currently, there are few landlords in the market willing to sign a month to month agreement, and this scarcity gives them leverage with their pricing. Another big advantage for landlords is that they can increase the rent at any time so long as proper written notice is given. Increased rent will also help out with any anticipated vacancies that can occur with a month to month agreement.
It is undeniable that familiarity is a significant factor in any renting agreement. When dealing with a standard lease, a landlord and tenant become used to each other for an extended period of time. Expectations are generally followed. With a month to month agreement, there’s the possibility of having to get used to a new tenant on a regular basis. Even with proper tenant screening, this may lead to some inconvenience. On the other hand, as previously mentioned, troublesome tenants can be removed and replaced with more agreeable ones more easily than in a standard lease agreement.
Ultimately, there are some clear advantages to either approach to renting. A month to month approach can be more productive for new landlords in particular as they get used to the business. They have more freedom in regard to their tenants and can observe trends while ensuring tenants behave the way they are expected to.