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When it comes to managing rental property, more options are never a bad thing.
The more tools you have– be it different vendors for repair jobs or levels of insurance protection– the better you can manage your properties effectively.
One of those tools are month-to-month leases, a less common but increasingly more popular type of lease that is useful in a variety of situations.
If you own rental property but have never used a month-to-month lease and are wondering if it’s the right move for you, this guide will help.
We’ll start with the basics– what is a month-to-month lease– and expand from there.
However, feel free to use the table of contents to jump ahead to whatever section is most relevant to you.
What is a month-to-month lease?
A month-to-month lease is a short-term lease agreement.
It is– as it sounds– effective on a month-by-month basis.
That’s notable because it gives the landlord the ability to cancel the contract at any time.
It’s important to mention, however, that a month-to-month-lease agreement still requires 30-day notice, or 60-day notice if the tenant has been with you for more than one year in most states.
Why would you want a month-to-month lease?
If you’re looking into month-to-month leases, chances are you already have an idea of why you’d use one.
But in case you aren’t clear on the benefits, here’s a quick summary:
Month-to-month leases offer greater flexibility
With a month-to-month lease, you can rent the property out for a shorter period of time. For example, when you’re considering a major change or move that would keep you from wanting to sign a tenant to a new 1-year lease but also want to continue collecting rent payments.
Or, similarly, when a tenant’s lease ends and they need additional time to get their new living situation setup such as beyond in the process of purchasing a home.
Month-to-month leases make it easier to raise rent prices
With a month-to-month lease, you’re not locked into a year-long lease with a tenant at the same rent price.
And while it is difficult to retain tenants after raising rent pricing, a month-to-month lease makes it easy to bring in new tenants at higher rates.
End the lease at any time (with proper notification)
Is your new tenant a real pain?
No problem, with a month-to-month lease you can send the tenant a 30-day notice and be done with the lease just like that.
No need to have to deal with a difficult tenant for a full twelve months until lease’s end with a month-to-month agreement.
Have something else to offer tenants
Some tenants might simply prefer the flexibility of a month-to-month lease, especially if they see themselves traveling soon and just need somewhere to stay temporarily.
Being able to offer a current or prospective tenant a month-to-month lease allows you to offer another kind of agreement that might be more conducive to their situation.
With all this said, while a month-to-month lease does offer less dependable rental income, it can be preferable in many situations.
At the very least, it offers you added flexibility and another tool in your toolbelt.
Tips for using month-to-month leases
If you’re convinced that you’d like to offer month-to-month leases, we’ve put together a quick list of tips to help you make the most of this flexible lease type.
1. You don’t need paperwork for a month-to-month agreement
In many states, all that’s needed to enter an official month-to-month lease agreement is for the tenant’s current lease to expire for they continue paying rent each month.
Alternatively, in many states a verbal agreement is enough to enter into a month-to-month lease.
2. Month-to-month leases can be ended with a simple 30 or 60-day notice
A month-to-month lease is easy to end, you just need to issue the tenant due notice.
However, it’s important to keep in mind that if that tenant has been living in that property for more than a year, they must be given a full 60-day notice.
3. You may be required to deliver notice in hard copy form
Depending on what state your property resides in, you may be required to hand-deliver or send the notice letter by physical mail.
States such as California don’t allow you to simply verbally communicate the notice or send it via digital communications.
Keep this in mind if you ever need to send a tenant notice who is on a month-to-month lease agreement with you.
4. You must also give proper notice before increasing rent
Similar to offering notice when requesting the tenant to move, with a month-to-month lease you also need to give the tenant proper notification before raising rent or any other major changes to the lease.
How much notice you must give when raising rent all depends on what state you’re in, but it’s typically between 30 to 90 days.
How does 30-day notice work on a month-to-month lease?
We touched on this earlier, but it’s important to state this separately because it is a big part of how month-to-month leases work.
With a month-to-month agreement, 30-day notice must be given before you’re allowed to end the lease agreement for any reason.
It also applies if you desire to make changes to the lease agreement as well, including raising rent pricing.
Also, in some states, more notice is required for tenants who have lived on the property longer.
For example, in California, a 60-day notice is required by physical letter if the tenant has lived on the property for more than a year.
Learn more about how notice works with month-to-month lease agreements in California at Civil Code Section 1946.
And additional state directories:
Month-to-month lease template download
To help you get started, we curated a comprehensive month-to-month lease agreement resource that covers every state.
Just find your state from the list and click one of the relevant download buttons to download a copy of a month-to-month lease agreement relevant to your state:
No matter what state, or states, you have property in, you’ll find a relevant form.
With that, we hope this guide has equipped you with everything you need to easily get started with month-to-month leases.
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- Collecting rent
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