Most people in the rental business hear the phrase “month-to-month lease” and think “that sounds risky.”
I used to be one of those people. When I first started managing houses, I defaulted to using 12-month leases, thinking that they would provide more security and stability.
But I kept running into a problem: Tenants that wanted to leave tended to do just that, regardless of those “safe” leases. Enforcing a lease breaking fee — or collecting any money associated with the unfinished lease — proved difficult, if not impossible.
While a 12-month lease is the most common option (in 2022, nearly 60% of leases fell into this category), month-to-month leasing allows more flexibility during the lease term. In some cases, it’s the right choice.
What is Month-to-Month Leasing?
It’s exactly what it sounds like: instead of a fixed 12-month term, the lease automatically renews every month until either the landlord or tenant gives proper notice (in New York, at least 30 days and up to 90 days notice is required for termination).
How Month-to-Month Leasing Helps Landlords
First of all, it makes it much easier for landlords to make changes. Instead of waiting out lease terms before making rent adjustments, landlords are able to adapt to the market much more quickly. The same is true for other lease changes — like a new pet policy, for example.
Month-to-month leasing also speeds up the process for making larger changes — like selling a property or renovating a unit.
It also puts more power in your hands when it comes to problematic tenants. If a tenant is consistently paying late, disruptive, or not a good fit, you can give proper notice and move forward without waiting out a year-long lease.
Tenants who are satisfied with the property and want to stay can be more responsive when on a month-to-month lease.
There’s also a growing demand for flexible housing. Nationwide, the workforce continues to shift towards freelance, contract and short-term work. In Buffalo, there’s also a large population of students and medical professionals who might prefer more flexible housing options.
The 12-month lease isn’t going anywhere. But month-to-month leasing is a useful tool to employ for certain properties — one that can give the landlord the ability to respond more quickly to a changing market.
At Nickel City Property Management, our policy is to use month-to-month leasing when we renew with Class B and C properties in our portfolio, while 12-month leases are typically a good fit for most Class A properties.
Yes, a month-to-month lease introduces some volatility. But in my experience, vacancies aren’t common — most tenants don’t move frequently unless there’s a major issue — and the flexibility gained is well worth it.
Is month-to-month leasing right for your property? Let’s talk more about it. Contact me at steve@nickelcity-pm.com.
