5 Benefits of Month-on-Month Lease
With millions of people renting properties, finding ways to make life easier for tenants is the key. While discounted rental rates sound great, one popular way to cater to their renting needs is by offering a month-on-month lease, benefiting both parties. Month-on-month leases work best for tenants on the go and landlords who want greater control.
If you’re still unsure, let’s dig into the benefits of month-on-month leases and find out if it’s worth the shot!
What is a Month-on-Month Lease?
As the name suggests, a month-on-month lease is a legal agreement that renews each month until the landlord or tenant decides to end it. It’s a flexible choice for both parties, typically requiring a 30-day notice to initiate termination. Otherwise, the tenant continues to pay rent at the beginning of each month.
While they can be signed from the beginning, most month-on-month leases are existing agreements that extend when a tenant isn’t ready to move out. That said, there are multiple reasons a landlord might offer a month-on-month release to benefit both parties. Let’s dig in further to find out!
5 Key Benefits of Month-on-Month Lease
In 2022, 31.8% of all tenancies were on a month-on-month basis. So, if you’re planning to sell your property soon or your tenant wants a temporary residence, month-on-month leases might work best for you. But that’s not all – some key benefits of month-on-month leases include:
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Favorable End Dates
Month-on-month leases offer tenants the peace of mind that they can end the contract whenever they feel like it. Unlike fixed-term leases, this lets both tenants and landlords choose to end the lease at the end of any given month. This is especially great for tenants who don’t have pre-determined plans for the future.
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Ease of Termination
One of the key benefits of month-on-month leases is their ease of termination. This helps landlords handle problematic tenants who don’t pay rent or damage the property. All they need to do is issue a notice 30 days prior, and the tenants have to leave on the scheduled date. This gives landlords more control over their property.
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Automatic Lease Renewal
Technically, a month-on-month lease agreement comes with no end date. This means these legally binding agreements automatically extend for another month unless the landlord or tenant decides to terminate them. The best part? This saves both parties the hassle of renegotiating their terms from time to time.
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Higher Earning Potential
Let’s be honest, month-on-month leases often lead to high tenant turnover, mainly because of their short-term nature. More often than not, landlords might also face gaps in rental income. To offset this risk, they raise the rent for month-on-month leases, which ultimately boosts their income without increasing the rent frequently.
However, it’s important to inform your tenants of any rent changes well before their 30-day notice period.
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Fluidity
This can be either beneficial or a downside for both parties. Let’s discuss them side by side. With a month-on-month lease, landlords can increase the rent amount every month. Although it seems like an increase in cash flow, it can also be a turnoff for renters. So, the increase should be realistic and market-based rather than wish-based.
Renters can change their house every month. This is especially helpful for people working in such professions where location changes are frequent. Otherwise, regularly moving here and there can be troublesome.
Conclusion
The benefits of month-on-month leases are manifold. Although fixed-term agreements remain standard, month-on-month leases are a win-win for both tenants and landlords – allowing the freedom and flexibility both parties require. However, it’s important to have a clear understanding of the agreement terms before hopping in.
