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

To enjoy the benefits of rental property ownership, you must lease out your property. You will have two options, either a month-to-month lease or a long-term lease. Which is the better option to achieve your investment goals? This article will provide an overview of what it looks like to choose a month-to-month rental lease. 

What’s a Month-to-Month Rental Lease?

A month-to-month lease is a contract between a tenant and a landlord that automatically continues month over month until either party sends 30 days’ notice. In Kentucky, the rent rates have not been clearly stated and will depend on your negotiations with the tenant. 

Whether you are new to management or are a seasoned investor and landlord, you should know what goes into managing a month-to-month tenancy. There are advantages and disadvantages to using a month-to-month lease and you need to carefully analyze them to gauge whether or not you think it will help you reach your specific investment goals.


Identify Quality Tenants

This type of lease is ideal for new landlords in the property game who don’t have the experience to screen and identify highly qualified tenants

landing qualified tenants

A month-to-month allows you to assess a tenant's stability through both the screening process and then while their rent from you. With a long-term lease agreement, if a problematic tenant was placed in your unit the process of ending the lease is more complicated and could be more costly. However, with a short-term lease, if you aren’t satisfied with the tenant's behavior, you can send them a notice more easily. 

Also, you will be able to refine your screening process after consistent action and review. You will pick out patterns that might come in handy in the future. When you find a tenant that you really like you can build a solid working relationship with them to ensure that they continue to rent from you.

Make More Money

With a long-term lease agreement, if you wished to increase rent, you’d have to wait for the initial lease period to end before making any changes. However, with a short-term lease, you’re in a better position to make changes as you see fit. That said, be sure to check your local rental laws to see what limitations are in place for rent increases. You should also conduct a rent analysis to ensure that increases are still in line with market trends to reduce the risk of tenant turnover. 

making more money

Easier Eviction Process

The eviction process can be costly, long, and confusing. This is even more true in cases of a long-term lease agreement. It’s easier to go through an eviction process with a month-to-month contract. The right is that either party is allowed to terminate a lease given that a notice, commonly 30 days, is given.


Unnecessary Pressure

You might find that you have too many vacancies in your multi-rental property. That means that you will take longer to recoup your initial investment.  

Finding new tenants for your property can be a daunting undertaking on your own. You might need to market online, rely on referrals, and depend on word of mouth to replace former tenants. What’s more, you'll have to conduct a screening process on all interested prospects to ensure that you’re landing the best tenant. This is difficult because with a short-term lease if you’re experiencing a lot of tenant turnover, you'll be forced to go through this process more frequently than landlords operating with long-term agreements. 

less stable income

Less Stable Rent Income

With a long-term lease, your rental income is set for the length of tenancy. However, a month-to-month lease is quite unstable given that the market can shift anytime and that contracts can be terminated with proper notice by either party. If your investment property is your main source of income, this instability can create challenges. However, if you have a diverse portfolio, then this high-risk investment could end up yielding high rewards. 

Huge Cost of Turnover

Due to frequent tenant turnover and the possibility of property damage, there can be additional costs associated with this type of agreement. It can mean that you need new fittings, a coat of paint, a new carpet, and perhaps a new appliance or two. The cost and time to advertise and screen tenants can become a financial issue for you in the long term as the costs accumulate over time. When considering this type of lease agreement, be sure to calculate additional marketing, screening, and maintenance costs to ensure that you have a solid financial safety net in place. 


Have you concluded whether a monthly lease is the best type of lease for your rental property? There are many benefits to operating under this kind of agreement, however, in order to be successful, you need to fully understand the risks involved and how to mitigate them. 

If you would like help managing your properties, preparing leases, marketing units, and more, contact the experts at Alltrade Property Management today! We have offered our exceptional property management services since 2005. By partnering with us, you will benefit from our services, experience, and professional advice. Get in touch with us today for our property management services!