Month to month lease

[Isaac White]

I have finished the rehab on one of the units in the duplex I own and I’m getting ready to rent it out. I started thinking about how I wanted to structure my lease agreement with my tenants. 

Option 1: lock the tenant into a year lease

Option 2: month to month lease 

My first instinct was to go the typical route and do a year long lease. After thinking about the two options a little more I believe the month to month option would benefit me more.

Here’s my thought process:

- This property is my first experience being a landlord, so I don’t have experience screening and choosing tenants. A month to month lease allows me the option of not renewing the lease if the tenant decides not to pay rent, trash the place, etc. without having to go through a long eviction process.

- Flexibility to adjust rents with market conditions more frequently. 

- Once I find a quality tenant on month to month lease terms, discuss the possibility of signing an annual lease agreement.

Let me know any thoughts you have on my plan or advice about structuring lease agreements. 

[Josie Brown]

Hey Isaac! You may want to consider using a property management company even if it is just to place the tenant. They should have a solid screening process and they may even be able to share data to show their success with placing tenants.

As for the options you are considering in regards to a lease, both have their pros and cons as you have mentioned. Keep in mind though that a month-to-month lease would also allow for a tenant to move out at basically any point (after two months, three months, etc.). This means you'll have to turn the property again, market it again, and screen tenants again, which all typically come with some sort of cost. The frequency of this process could definitely occur more often with a month-to-month lease versus a one-year lease.