Do I charge more rent if my tenant wants month-to-month lease?

Question

Hi All,

My tenant has been in my rental for 5 years now. He has been paying the rent and keeping it clean. After the one year lease expired 4 years ago, he asked to do a month-to-month lease which I agreed to and it's been that way ever since. I kept the rent the same, initially, because I liked him. My question is, should I have charged more for a MML (month-to-month lease) or refused his request for a MML and done a yearly lease? I have heard recently that most landlords charge more for a MML. I'm in the Detroit metro area in SE Michigan.

Thanks.

Account Closed · Answer

normally I would say yes, but in your situation, tenant has been good and is long term and taking care of your property, so I think with that situation, it would be a mistake

Robert Melcher · Answer

I send a renewal offer for a year's renewal and include the MTM rate in the offer.

If they can drop notice anytime (like in the winter) I want a premium for the privilege of making my planning and marketing more difficult.

Account Closed · Answer

Charging more for month to month could be considered discrimination--be very careful.  (It doesn't matter if you're discriminating--if it appears you are, you are guilty until proven innocent.)

Steve Vaughan · Answer

Hi @Todd Moriarty.  For a new tenant that wants a m-m, I do charge a little more and have a deposit forfeit schedule that reduces to 0 at 6 months.  For instance, if they vacate within 3 months, their deposit is 100% forfeited, 50% forfeited at 4 months, 25% at 5.

It is custom in my area to not renew leases.  In a lot of areas it is different and renewals are expected.

For a five-year tenant I would not raise rent just for the fact they didn't renew.  I do raise most rents a little bit every year regardless.  Hope this helps!

Account Closed · Answer

I'd say that if your tenant refuses to sign another year lease, then he probably thinks he might leave within that amount of time anyway. I don't think you have anything to risk by raising rent, it sounds like he might already be on his way out.

I would give them the option, you can resign another 1 year at the same rate, or you can pay more month to month. It is an extra burden for you to deal with, therefore, you deserve more money.

James Wilcox · Answer

Ryan R. normally you would charge a bit more for a mtm like stated above. However, since you have a good relation with this dude I would not worry about it too much. Do see what the Detroit metro market is telling you to do however! Vacancy can really hurt your cash flow. I would open up the conversation and see what his thoughts are on doing another yearly lease or being charged a bit extra for mtm. You can explain your costs have went up slightly in his stay there and if he could handle a bit of it for a mtm option you would be happy to have him stay on as a tenant. Many tenants remain on mtm after their year term because they like the option of leaving if need be. Some of them (like in your case) don't leave as quickly as they "think" they will. Yet to have the mtm option available to them, it would normally come with a small increase in rent. We do a standard $5 for mtm, but it all depends on your market and your tenant relationship. I wave the fee sometimes for the best tenants.

Ronald Perich · Answer

Leases in our area are typically one year long. Month-to-month usually yields a higher rent payment. Even with a month-to-month lease, I include a charge of $200 if they vacate before the 11th month of residency. There are so many start-up costs when renting to someone new that I feel very justified with that extra charge. It's actually too low if you ask me.

Linda Liberatore · Answer

I would assess and confirm the current rents in the area and request a reduced increase amount to compensate for his long term relationship.  Our clients attempt to establish a policy on increases and MTM rates that change based on the fluctuating market on rents. Our concern would be the additional risk you hold if they give notice to move during a more difficult season for filling a vacancy. A MTM lease amount is generally higher as a form of compensation for that risk and freedom to vacate on short notice.

Christine Mwai · Answer

More important to me than a rent increase would be the move out notice time they give me... I would get that in writing.. 2 months in my view...then they can do a month to month for 3 months or 5 more years...

Kimberly H. · Answer

Normally mnm is more, but in this case with his track record i wouldnt charge more just because it in mnm, but just make sure to increase it some so u dont get to below market

Do I charge more rent if my tenant wants month-to-month lease?

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