When renting a place, it’s vital to have the flexibility to move on when desired. Standard leases tend to lock tenants in for at least a year. However, there’s a popular alternative option many renters prefer, which is a month to month lease. Furthermore, these leasing types are ideal for individuals with short-term housing needs or people looking to test a market before buying property.

What is a Month to Month Lease?

A month to month lease is an agreement between a tenant and the landlord that only locks the tenant in for one month at a time. Given the ability to terminate at any time with proper notice. Furthermore, a month to month agreement typically comes after a traditional one-year lease. Providing the option to sign another long-term lease agreement or the chance to move on after a short period of time.

How a Month to Month Lease Works?

A month to month lease is self-explanatory; it’s an agreement between the tenant and landlord to reside in the property with no end date or long-term expectations. Similar to a standard lease, the rent is due on the first of every month with the same guidelines for late payments. The lease will continue to renew each month until one side decides to move on. On average, the notice to terminate a month-to-month lease must be written and submitted within 15 days. However, if the tenant resides for a full year before lease termination, it’s a 30-day notice of termination. Overall, a month-to-month lease agreement follows the same guidelines, laws, and regulations as a traditional yearly lease.

Common Situations for a Month to Month Lease

There may be circumstances where a renter prefers a month to month tenancy lease compared to a yearly lease. Some of those reasons can involve the individual’s lifestyle, while others revolve around employment. Below, we take a deep dive into common situations where a month-to-month leases desired.

1. After a fixed lease: Once a yearly lease comes to an end, most landlords give the option of a month to month lease or at least a six-month lease. Furthermore, the landlord may prefer keeping the tenant, considering they are comfortable with the person and can expect rent to be paid on time. Therefore, the landlord can compromise with the tenant, allowing a monthly lease rather than locking them in for the long run.
2. Provides Flexibility for Landlord: Considering a month-to-month rental lease can be a short-term option; the landlord has the chance to terminate the lease at any given time. As humans, we live life on its own terms, things tend to happen. Therefore, when owning a secondary property, most landlords can use that unit if any financial issues arise. A short-term lease allows this to become a possibility.
3. Excellent Short-term housing option: Short-term housing may seem like a hassle, consisting of constantly packing and moving. However, some individuals have no other option outside of short-term housing. Whether it’s for employment, like a traveling nurse, or an internship. In addition, college students prefer short-term leases since they will only utilize the rental for a semester or two, leaving the place vacant during the summer months.
4. People new to an area: When moving to a new, unfamiliar neighborhood. It’s suggested to rent a place to gauge your interest level rather than wasting time, money, and resources on purchasing a house. If the area lives up to your expectations, then the individual can determine long-term options to stay within that community. If the area disappoints, the individual can pick up and relocate with ease compared to other situations with strings attached to that neighborhood.

Legal Considerations for Short-term Leases

• The notice to terminate the lease must be submitted in writing within a 15-business-day window. Unless the tenant had a yearly lease before switching to a monthly lease, the written notice must be provided within 30 days.
• To increase the rent on a monthly lease, the landlord must provide notice 30 days before raising the rent.
• The laws for a landlord to terminate a monthly lease are much more lenient than an annual lease.

Advantages of a Month to Month Lease

Benefits for the Tenants:

• No long-term contracts/agreements. The tenant has the ability to terminate a monthly lease at any time with proper notice, rather than being stuck in a lengthy agreement.
• Excellent way to test an area before spending time, money, and resources on purchasing a home.
• Zero penalties for breaking the lease.
• Most of the time, utilities included in a month-to-month lease. Therefore, taking pressure off of the tenant and allowing for one less headache.

Advantages for Landlords:

• With proper notice, a landlord can increase the rent on a month-to-month lease at any given time. Therefore, allowing rapid adjustments to shifts within the rental market.
• A way to keep the same tenant longer than the original yearly lease. Limiting the overall tenant turnover rate.
• Ability to terminate the lease at any given time.
• Flexibility to use the property for any purpose. Whether the rental can be utilized as a fall back plan involving housing for the landlord. Furthermore even the potential to maximize profit by using the rental for vacation or other short-term purposes.

Downside of Involving a Month-to-Month Lease Tenancy

• Lack of long-term income, chance of higher vacancy rates between tenants compared to locking a renter in for an annual lease. In addition to more frequent tenant turnover.
• Higher maintenance cost. More frequent repairs between tenants, conducting more yearly inspections, lead to the demand to complete any necessary renovations.
• Less stability, considering each side can terminate the lease at any time.
• Potential for more frequent rent increases, compared to being locked in at the same rate for an extended period of time.
• More wear and tear, when theres constant tenant turnover the individual may not respect the property as much as a long-term tenant.

When to Choose a Month to Month Lease

1. Short-term housing needs. If the renter attends college, travels for work, or completes an internship, then a short-term lease desired since the tenant doesn’t need to commit to long-term goals.
2. Uncertain job or overall plans. If there’s no long-term plans to remain in a neighborhood, having the ability to pick up and leave leads to the desire of a short-term rental like a monthly lease.
3. Testing a rental market. When moving to a new area, you want to limit the strings attached. Considering an unfamiliarity, you wouldn’t want to invest much time and money into purchasing property until you feel comfortable. A short-term rental or lease is an excellent way to test a market before going through the hassle of buying property.

Is Month-to-Month Tenancy the Right Decision?

A month to month lease can be the right move depending upon your rental needs. As for any decision, a monthly lease has its advantages and disadvantages. If you’re an individual new to an area or uncertain long-term plans, then a month-to-month tenancy can be ideal. Furthermore, it’s vital to understand guidelines for these short-term leases. Always pay your rent on time and communicate any changes or desire for termination with the landlord.

Lastly, carefully read over the lease to know your expectations as a tenant. If the time comes to find a short-term rental, use a real estate company with experience placing tenants. Therefore, submit your information below, and our family-owned real estate company will be happy to assist!