Is a Month-to-Month Lease Better for Landlords?

Renting out a property in Virginia can be an incredibly profitable venture. The rental market at the Old Dominion is better than ever, with hundreds of newcomers moving in every day.

Even with a high rental demand, making your Virginia rental stand out from the rest can be incredibly complicated. A great way to increase the visibility of your rental and attract more tenants is by offering flexible lease terms, such as a month-to-month lease.

These short-term leases offer plenty of benefits to both landlords and tenants, such as higher cash revenue. However, month-to-month leases can also bring in several challenges.

If you’re not sure whether renting your home on a month-to-month basis is the right call, you’ve come to the right place!

In this guide, the experts at Vesta Property Management will go over the benefits and disadvantages of month-to-month leases. Let’s dive in!

How Is a Month-to-Month Lease Different From a Traditional Lease?

Unlike traditional leases, which typically last for a fixed term such as one year, a month-to-month lease only lasts a month. It automatically renews unless either the landlord or tenant gives notice to terminate their contract.

This type of lease allows for greater flexibility, making it easier for tenants to move out with shorter notice periods. However, month-to-month leases also allow landlords to adjust rental terms, like rent increases, as frequently as they want.

While traditional leases offer stability and predictability for both parties, month-to-month leases are ideal for those seeking short-term arrangements or uncertain about their long-term plans.

The Pros and Cons of a Month-to-Month Lease

The Benefits of a Month-to-Month Lease

A short-term lease will help you attract more potential tenants. Other benefits of month-to-month leases include the following:

Higher Rental Income

Month-to-month leases are perfect for furnishing short-term and vacation rentals. Renters looking to stay at a place for the short term are often willing to splurge more on rent, as it tends to be cheaper than going to a hotel. Even if you have to spend more on maintenance and advertising, you can earn a higher rental income by offering flexible lease terms!

Flexibility to Adjust Rental Terms

Month-to-month leases allow landlords to modify the rental terms as frequently as they want. This includes adjusting rent prices to align with market rates, changing the conditions of the lease, or implementing new policies.

This flexibility will enable you to respond swiftly to market dynamics and maximize your rental income.

Ease to Address Tenants

Dealing with tenants that can cause potential problems is never easy. However, a month-to-month lease will allow you to deal with renters more effectively. If a tenant is problematic, you can terminate their lease after only a month instead of having to wait for a fixed-term lease to expire.

Reduced Vacancies

While the flexibility of a month-to-month lease can lead to higher tenant turnover, it also reduces the risk of long-term vacancies. You can quickly fill vacancies with new tenants who prefer short-term arrangements, ensuring a continuous rental income stream.

Flexibility for Property Sales or Personal Use

If you’re planning to sell your property or use it for personal reasons, you can greatly benefit from the flexibility of a month-to-month lease.

The shorter commitment period allows for smoother transitions, making it easier to prepare the property for sale or personal use without having to wait for a long-term lease to end.

Higher Tenant Retention

Offering a month-to-month lease can attract tenants who value flexibility, potentially leading to higher tenant satisfaction and loyalty. Satisfied and good tenants are more likely to take care of the property and maintain a positive relationship with the landlord, reducing the likelihood of disputes and property damage.

The Disadvantages of a Month-to-Month Lease

While a month-to-month lease offers more flexibility, it also presents several disadvantages for landlords. Here are some of the potential downsides you should consider before opting for this type of rental arrangement:

Increased Turnover

Month-to-month leases typically result in higher tenant turnover compared to long-term leases. This increased turnover requires landlords to invest more time and resources into marketing the property and finding new tenants, potentially leading to financial losses if vacancies are not filled quickly.

Unpredictable Rental Income

Frequent tenant changes mean that rental payments are less consistent, making it difficult for landlords to plan their finances. This uncertainty can be challenging, especially if you rely on your rental income for mortgage payments or other expenses.

Increased Maintenance and Repair Costs

Higher tenant turnover often leads to more signs of wear and tear on the property. In order to attract new tenants, you’ll have to splurge more on repairs and upkeep between tenancies. These additional costs can add up over time, reducing the overall profitability of your rental property.

More Administrative Work

Managing a month-to-month lease involves more administrative work compared to long-term leases. Landlords need to handle frequent lease renewals, tenant screenings, and move-in/move-out inspections. This increased workload can be time-consuming and can quickly lead to burnout.

Unstable Landlord-Tenant Relationships

Month-to-month leases can hinder the development of long-term relationships with tenants. Stable, long-term tenants are more likely to take better care of the property and communicate openly with the landlord.

Frequent tenant turnover can disrupt this dynamic, leading to a less stable and more impersonal rental experience.

Bottom Line

Despite not being the norm, renting your property on a month-to-month basis can be incredibly beneficial. Short-term leases offer more flexibility than traditional lease agreements.

They can also bring in a higher rental income. However, a month-to-month lease can lead to higher tenant turnover and longer vacancies. Now that you understand the pros and cons, you can determine whether a month-to-month lease is right for you!

If you’re ready to rent out your Virginia home on a month-to-month basis, contact Vesta Property Management! Our team of dedicated property managers can help you find great tenants and ensure the profitability of your investment.