Month to month tenants - keep or vacate

[James Brown]

Hello Biggerpockets, I'm writing this post to ask for some advice. I'm about to close on a 4-unit property in Illinois. 3 of the units are currently rented out on a month to month basis. Tenants all seem to have good quality and have been paying rents on time.

My question is whether I should terminate the leases as soon as the deal closes, likely in late November/early December. I have to give notice a month in advance, so it means the tenants will have to leave by end of December. There are a few considerations. On one hand, I'm hoping to do some rehab as soon as possible so I can start renting the units out at higher price. On the other hand, end of the year is probably not the best time to list, and I'm worried that I may not be able to rent out the room for a while. Also, it feels a bit cruel to kick people out at the end of a year, with the cold weather and the holidays.

Very interested to get everyone's opinion. Would you keep the tenants for a while (say for another 3-6 months until it becomes warmer and the market more active) or ask them to leave as soon as possible? Thanks in advance.

[Will Fraser]

Hi @James Brown, welcome to the Biggerpockets forums!

First, you're not "kicking them out" . . . unless your state has some very odd Tenant-Landlord laws.  You would be giving them notice, and you can determine how long that notice is in case you want to give them double the normal time.

In general I've learned a hesitation to "lock in" tenants until I know, like, and trust them.  Over the seasons of acquiring tenants i've seen that many landlords are not as disciplined or as scrupulous as they ought to be, or perhaps they were for a number of years and then got a bit lazy when it came time to sell.  Whatever the case, I'd rather have a few months of MTM to test out the relationship before I sign myself up for 12 months of less-than-ideal.

Also, if you're feeling hesitant about having a vacancy in this season, then the MTM trial run is doubly perfect!  Wait until Spring and if you see the relationship as mutually advantageous then give them the option to stay MTM or jump on a longer lease, or otherwise give them notice that you won't be renewing the MTM lease and get the unit back in a nicer time to list.