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Why Leases Are Better Than Month To Month Rentals

Home Inside Of A Bank | Leases are better than month to month rentals

One of the most significant decisions you’ll have to make as a landlord is whether to do annual leases or month to month rentals. The residential lease you choose depends on your specific financial goals and how much time and work you’re willing to put into handling tenant issues.

An annual lease typically runs for one year, although two-year contracts are becoming more common. Month to month leases lasts for one month, and usually automatically renew unless there is notice from the tenant that they do not wish to renew. In this case, the tenant moves out of the property within a matter of weeks.

Month-to-month leases work well for landlords that put the time, money, and energy into ensuring when one tenant moves out there is another one ready to move in. This lease agreement typically sees more turnovers and vacancies, which means a higher risk of loss of rental income.

If you ask anyone from a Murrieta or Temecula property management company, they’ll tell you that tenants and landlords are typically happier when they utilize annual leases.

Tenants Prefer Annual Leases

Annual leases are more predictable and manageable. Tenants often prefer this rental agreement because rent prices are usually lower, and they know they have at least a year before having to shell out moving expenses and fees associated with utility transfer fees and security deposits. This is a more predictable arrangement for everyone involved and reduces the chance of surprises on both ends.

Tenants who want to be sure their rental rate is fixed and can not be increased unexpectedly appreciate the stability that comes with annual leases. It is uncommon for a landlord to institute new rules, change a policy, or add specific fees during an annual contract. Tenants know that when they agree to this long-term lease, they won’t be surprised by unexpected changes during the time that they occupy the property. It’s almost like being an H.R. Manager and avoiding workplace conflict.

Landlords Prefer Annual Leases

When a tenant understands that he/she is contractually obligated to remain in the home for at least a year, it means the landlord can expect 12 months of steady, passive income. This type of lease frees the landlord from spending time and resources, filling vacancies, and rushing to prepare a property for move-in. It also reduces costs associated with new-tenant screenings and marketing. Delegating these taks to a property manager can actually help improve your bottom line.

Landlords who choose the month-to-month rental agreement open their property up to a revolving door of tenants. These short-term tenants may not see the property as their long term home and fail to take care of it as if it were their own. Tenants that sign an annual lease tend to take better care of the property because they know they’ll be living in it for at least 12 months. Less wear and tear on the property is another benefit of an annual lease. A Menifee Property Management company can help you market for a longer lease.

Another reason many Temecula, Murrietta and other California landlords prefer annual leases is because it gives them more predictability and flexibility when it comes to the income they earn each month. They can budget more effectively because they can statistically count on the rent coming in consistently for 12 months.

Whether you choose to rent your property month to month or annually, you’ll need someone to manage the day to day responsibilities that come with owning an investment property. Benefit National is a professional property management company that serves Riverside & San Diego Counties. Call us today to experience full-service Temecula property management at its best.


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