As A Landlord Is This Type Of Lease Best For You?

If you are a novice landlord or even have some seasoning under your belt, I am sure at some point you either have or will ponder the question as to whether or not to use a month to month lease.

As a landlord with over 10 years experience, I can tell you what I think is best in the areas where I have owned property. The ultimate decision will come down to what you feel comfortable with and more importantly the area in which you own rentals.

Keep in mind 99% of the rental properties that I have own are in the central New Jersey area, so laws may be different where you live. You should always confer with an attorney who is an expert on this matter before you make any decisions.

A month to month lease is basically what it sounds like. The tenant signs your agreement based on the knowledge that as each month passes by, they will need to resign a new lease, or adhere to an agreement already signed that says their tenancy is only valid for a month at a time.

I personally do not like month to month leases. They are time consuming, and in the areas where I rent, are a big turn off to good tenants. Someone who is stable, with a good job, family, etc., and that is looking for a nice place to settle down, does not want the stress of a month to month lease, giving the landlord the “power” to move them out at the end of any month or constantly increase their rent.

On the other hand, if you are in an area where good tenants are as common as hitting the lottery, then a month to month can be your best friend. It adds a bit of pressure to the tenant living there. The tenant knows that the lease expires at the end of each month and if the landlord chooses to, does not have to allow you to remain. It is a good way of, without directly saying it to the tenant, ‘you better be on your best behavior and more importantly pay the rent on time.’ Ok maybe not that stringent, but you get the point.

The reason I do not like month to month leases is that the eviction process in my area is still the same as if I had the tenant signed to lets say a one year lease. Also, because of rent control, having a month to month lease does not necessarily allow me to raise the rent more than a certain percentage from what the original amount was.

If the rental market is competitive in your area where you have an abundance of tenants and tenants understand that a month to month lease could mean more rent each month, then I say go for it.

However, on the opposite side of that, if the tenant has a lot of choices and you only sign them to a month to month agreement, they could jump ship at the end of the month to another place, and you still have to give them their security deposit back etc. Now, because the tenant jumped ship, you have to go through the entire process of finding a tenant, all over again.

The area in which you own and rent out will basically dictate whether a month to month lease is a good choice. Best place to start is your local real estate investment club, or local property managers. They have a lot of knowledge on your area and what you can and should do.