Occupancy Duration with Month-to-Month vs. Fixed-Term Leases

[David Jones]

There seems to be a general assumption that longer occupancy durations can be achieved by using fixed-term leases (e.g. 1 year) as opposed to month-to-month leases. However, despite spending quite a bit of time on Google Scholar, I haven't been able to find any published studies that prove this assumption to be correct.

In most cases, fixed-term leases will create artificial inflection points in tenants' lives, forcing them to make housing decisions at arbitrary times. Although these inflection points may cause some tenants to stay longer, it seems just as likely that they would cause other tenants to leave earlier. Since month-to-month leases create no such inflection points, tenants are subject to a greater degree of inertia (i.e. "I guess I'll just stay another month...I can always move out next month."). The question is whether this inertia translates to longer occupancy durations (on average).

I'm sure there's no shortage of anecdotal evidence (likely with conflicting conclusions), but is anyone aware of any studies on this subject that use large data sets?

[Bjorn Ahlblad]

@David Jones welcome to BP! I only have my own anecdotal evidence. Try as we might as landlords two things we can't control. When they pay and when they go. I have been a LL for too many years and have seen no difference in length of stay whether 1 year lease or MTM lease. I have several tenants in my apartment building who are MTM and have been there for more than 10 years.

I think what has more relevance is tenant class. Generally better class tenants stay longer in better class properties. I think most LL's will agree on that.