Dallas-Fort Worth Real Estate Investor Club

Month to month lease

  • 18 Jan 2017 11:41 AM
    Message # 4554752
    Deleted user

    We have had great tenants for 10 months in a SFR, lease up in March.  They have asked to go month to month from March until June.  What are the pros and cons of doing a month to month lease to extend the term?  Is there any conventional wisdom about having a vacancy in the summertime, like first of June?  Would that be good or bad?

  • 19 Jan 2017 6:30 AM
    Reply # 4556591 on 4554752

    The downside of a month to month lease is that your tenants could leave, but the silver lining is that you can raise the rent when leasing to your next tenant.  You could also allow the current tenants to go month to month for an extra 20 or 50/mo.

    Keep in mind that your tenants are your customers, so try to keep them happy.  If they feel like/think/are of the opinion (perception is reality) they are tied up against their will, they won't like it and may try to retaliate, e.g. damaging the property, making constant maintenance requests, making excuses for paying just past the due date, and otherwise trying to see what they can get away with.

    If you only get 12 - 15 months out of a great tenant, that's like hitting a single.  Be satisfied with that and get ready for the next pitch.  

    Summer is a good time to advertise a vacancy, particularly early in the summer when people are moving around prior to the start of the school year.  If you find yourself leasing in a slower period you can advertise some kind of move-in special, but keep in mind the DFW market is pretty strong depending on where your property is and the condition of it.

    I've been a landlord in FW for ~9 years, so if you would like to discuss further feel free to give me a call/text/email.

    comanche3000@live.com
    979-450-1994  (cell)

  • 19 Jan 2017 7:57 AM
    Reply # 4556678 on 4554752
    Robin Carriger (Administrator)

    Jesus had some good thoughts.  Additionally, almost all of our tenants go "month-to-month" when the initial lease expires.  The terms of the lease remain in place.  It just implicitly renews every month.  The tenants still have to give you the written notice specified in the lease, so you can prepare for their departure.  We know that tenants who want to move are more likely to do it during the summer, when school is out, so we just try to be ready for it.  The upside is that, with the rental market being so strong, if they do move, you may be able to increase the rent more than would've been practical for an existing tenant.

    If you have any questions, please feel free to give me a call at 817-300-1132.

    Thanks,

    Robin

  • 06 Feb 2017 11:52 AM
    Reply # 4594239 on 4554752
    Deleted user

    I think that Jesus nailed this! Robin, I'm a little surprised of the 1 year initial term with a month-to-month option afterwards as I thought those options were all but eliminated from common practice in the early 2000's. For me (with limited rental homes), if a tenant is good, I will bend over backwards to accommodate including possibly allowing the month to month without an increase in rent. 

    Brian R. Baker, MBA 


  • 08 Feb 2017 11:27 PM
    Reply # 4599634 on 4554752

    My dad has been landlording since the 70s and he likes to renew the lease so he knows if the tenant is staying put for another year.  He usually increases the rent by a little bit but it would still be lower than market rent.

    If the tenant moves out, he fixes the property up and then is usually able to get a tenant at market rent.

    There does not seem to be a downside to his approach.

    Thanks,
      Neil Aggarwal
      NSA Partners, Ltd.

Powered by Wild Apricot Membership Software