Should we increase price of a month-to-month lease for good tenants?

[Brittany Guimond]

Hi friends! Looking for some thoughts. We have really solid tenants in our SFR. Their lease is up in July and they asked for a few more months. We do not have a month-to-month clause in their lease because we wanted to have more control over the timeline and hoped we wouldn't have to re-list it in the winter months. These tenants are ANGELS and we want to keep them happy, but we also recognize that giving them a few more months could push us into the winter, which may mean it'll sit vacant for longer and we'll have to cover that cost. Curious to know — do you increase your rent on a month-to-month basis? Or do you keep it as-is if you know the tenants are great and you want to keep them in there for longer?

[Phillip Austin]

Hi @Brittany Guimond! Best practice is to increase rent on tenants who wish to go MTM. Most professional companies will increase between 8-10%.

While we always want to show appreciation, especially to great tenants, we have to treat it like a business. You absolutely do not want a vacancy between Thanksgiving and Presidents Day. Your days on market will be longer and you may also be forced to lower rent to fill the vacancy. The increase in rent is meant to cover these expenses. Plus, who wants to be doing showings during the holidays?!