Thinking Of Getting A Monthly Lease? Consider These Pros And Cons
There are many reasons as to why people rent houses — they may not have the finances to buy a house, they may like living in apartments, or want to have easy access to public transport.
According to the U.S. Census Bureau, 35.8 percent of the population is living in rented accommodation.
Normally a lease contract lasts for 12 months, though they can range from three months to two years as well. Lease agreements drawn for periods longer than one year often have more concessions, or even a break in rent for a guaranteed tenancy. Shorter leases are a little more expensive as they expire quickly.
If you are not sure about moving, having a month to month lease is suitable for you.
A monthly lease is a contract between the owner and the tenant that establishes tenancy with no definite end date. Instead, either party can end the lease with a proper notice period. Though different state and local laws lay down 30, 60 or 90 day notice period, the lease agreement will have the notice period explicitly mentioned.
If you and your landlord can mutually agree upon it, a month-to-month lease can be ideal as it will give you time to find the house that you are looking for. But this too can have drawbacks.
Given below are four reasons why a month-to-month lease may be best for you.
Why You Should Opt For A Monthly Lease:
1. Ease in moving:
It is most likely that you will change to a month-to-month agreement when your yearly lease ends. Often landlords give their tenants the option to either have a yearlong lease or switch to a month-to-month lease.
If there are going to be big changes in your life like a change of jobs, moving to a new city, getting married or purchasing a house, a month-to-month lease gives flexibility. If you continue to stay, then a month-to-month lease can be easily converted into a long-term lease.
If you have been the ideal tenant paying rent on time, not causing damage to the property and nuisance to the landlord, then you can put forward the idea of a month-to-month lease to your landlord. House owners prefer to keep good tenants even on a month-to-month lease.
David Mele, president of the real estate site Homes.com, says that tenants should not hesitate in making offers to their landlords. Often tenants do not know that they can negotiate with their landlords.
2. Roommate Issues:
Working out a lease even with your best friend can be difficult. If your roommate plans to move before the year is out, it is sensible to start a month-to-month lease.
This will save you the complicated process of releasing your old roommate from the lease and adding a new roommate or taking a huge risk with an illegal sublease. It would be simpler for you to start a month-to-month lease with the new roommate with the consent of your landlord.
3. No penalty:
Irrespective of the type of rent contract, uncertainty is a big problem for tenants. If you have to move before the end of a fixed lease contract, you will have to pay for breaking the lease, says Mele.
If you break the lease contract, you may have to pay a few months rent after moving out, while your landlord tries to find a new tenant. If the landlord is unable to find a new tenant, you may have to pay the rest of the rent for the lease duration.
If you are worried about a pay cut in the future or have to move within the year, then the month-to-month lease is your best option.
4. Home Under Construction:
If your dream house is under construction, this can add to the difficulty in planning your lease plan.
“If you have started construction on your house or are planning to move into a new apartment building as soon as it is ready, it is best to plan for delays by having a flexible lease plan,” says Mary Gwyn, owner and chief innovator of Apartment Dynamics, a property management firm that trains other companies in property management.
Before you begin to negotiate the month-to-month lease, consider these four issues that may make the arrangement less attractive.
Getting A Monthly Lease Has Drawbacks Too:
1. You May End Up Paying More:
As there is a risk of vacancy in month-to-month lease agreements, landlords are likely to charge a higher rent. Landlords may charge an additional fee to agree to a riskier month-to-month lease agreement, making it a little expensive for you!
According to Gwyn, opting for a month-to-month comes at a cost and the fees can be anything from $30 to $130 (per month). The difference between a yearlong lease and a month-to-month lease can be of a few hundred dollars, in cities where the rentals are high.
2. The Landlord Can End The Lease:
A 30-day notice period may be best for you, but remember that your landlord has the same privileges. In a month-to-month lease, your landlord can give you notice to vacate the house as well.
Gwyn says that when landlords advertise a property as a month-to-month lease, more often than not they have their own restructuring plans. They may bring down the entire property or may be going in for major restructuring, and with a month-to-month lease, it is easy to vacate all tenants.
3. The Landlord May Not Agree:
Many landlords do not like the month-to-month lease because of the risk of vacancy. But some landlords may not agree at all. The amount of loan the landlord has on the rental property will decide his ability to oppose month-to-month lease.
4. Loss Of Concessions:
As the number of rental buildings increases in urban areas, they give concessions to attract tenants, like free months’ rent, exemption from amenities’ fee or even free TV. These concessions are normally applicable for long-term leases. If you opt for a month-to-month lease, read the lease document carefully where these concessions are concerned.
With a month-to-month, you are paying a price for the flexibility to move out anytime. Study all options carefully to ensure that you do not end up paying more rent in the long run.