Regarding leasing agreements, the two most popular agreements are month-to-month and year-long. Most landlords prefer the traditional year-long agreements because they lock tenants into a rental property for an entire year, but let’s dive into the pros and cons of month-to-month leases and see how they could be beneficial to you and your Round Rock rental properties.
Pros of Month-To-Month Tenants
Month-to-month agreements allow landlords to control whether they want to keep the tenants in the rental. All landlords have to do is give adequate notice per state requirements that the agreement will not be renewed and the tenant would have to move out. Texas and most states require a 30-day notice, but be sure to verify with your state.
Rent Raises and Policy Changes
With month-to-month agreements, it’s easier to implement rent raises and policy changes when your rental properties are vacant. You also won’t have to worry about losing any tenants during this time, so you can see what works and what doesn’t.
Keep Great Tenants
If you have tenants who pay their rent on time and aren’t ready to sign a fixed lease, being able to offer them a month-to-month lease is a great option. It will keep them there longer, not cause you any problems, and will save you from having a vacant property.
Cons of Month-To-Month Tenants
Lack of Stability
One of the biggest cons of month-to-month agreements for landlords is the lack of stability. It’s challenging to figure out how profitable you will be in a year with the unknown of how many tenants you will have and how much rent you will collect.
Flexibility = Uncertainty
The flexibility of controlling tenants and end dates can also mean uncertainty. Not knowing how long a tenant will be in a rental property means you don’t know how much money you will make or when you will need to find new tenants.
While landlords can provide notice to tenants to move out, tenants can also give a 30-day notice to landlords at any time. This means short notice for landlords to find new tenants, which could lead to further issues if landlords rush and don’t conduct a proper screening.
Overall, there are a lot of benefits to month-to-month leasing agreements, but it is important to compare them to yearly agreements and decide what is best for you as a landlord. If you have any questions or need recommendations, reach out to us! We are always here to help.