Property investors in Maryland have a big responsibility to keep their rentals full. Whether the economy is thriving or not, keeping tenants in your properties can always be challenging.
Sometimes property owners need to try something different to maintain consistent cash flow. When it's challenging to keep renters long-term in a property, monthly options could be worth considering.
You may wonder how it works if you've thought about changing your standard lease agreement to allow for a month-to-month lease agreement. You may also wonder what the pros and cons for renters are with this type of rental agreement and how it can incentivize them to keep your properties occupied.
Here is a breakdown of the pros and cons for renters in the Bethesda area when considering a monthly leasing situation!
Pros of a Monthly Rental Lease Agreement for Your Residents
A monthly lease agreement allows your renter to move out with 60 days' notice. In other words, they are only committed to one or two months at a time, not a year, like a standard long-term rental contract. Here are a few ways this arrangement benefit renters.
Flexibility for Renters
With a month-to-month lease agreement, everyone has flexibility. Not only will residents have a degree of flexibility if they want to move in a month or so, but property owners also enjoy this flexibility. This can be beneficial if you end up with a bad tenant.
Monthly agreements mean you won't have to go through the hassles and expenses of eviction because, with 60 days' notice in the Bethesda area, you can simply opt not to renew the lease. Just remember to give the tenant proper written notice if you decide not to renew the lease agreement.
Good Selling Point to Improve Occupancy Rates
You can advertise the monthly lease option as a selling point if it's challenging to find quality long-term renters for your rental properties.
Some potential residents prefer a short-term rental agreement. They don't want to sign a one-year lease because of work or scheduling conflicts. For example, maybe they are doing a temporary job in town.
The ability to rent for a few months is ideal for residents who come and go from the area. When positioned and listed properly, a short-term lease for your property will be much more attractive than a hotel, which can be pricey and cramped.
Cons Renters Consider With a Monthly Residential Lease Agreement
While some renters see plenty of benefits with monthly agreements, not everything is all roses. Offering a monthly lease agreement has its downsides, and property owners should understand these concerns from tenants. If you're not sure how to overcome these concerns to offer monthly leases, a Bethesda property management expert can help!
Higher Rental Rates
A month-to-month lease agreement is not as common as a long-term lease agreement. Renters know this. They also realize that monthly agreements often come with a higher monthly rent price in exchange for the flexibility of the month-to-month arrangement.
While this can be a nice benefit for residential property owners, renters must weigh the costs of paying more per month for your property than they probably would pay for a lengthier rental agreement.
Instability (or Short Notice to Move Out)
With a standard rental lease agreement, residents know they are locked into a home for a finite period of time as long as they follow the rules and pay rent on time.
However, with a monthly rental contract, they lose the stability and peace of mind that comes with fixed-term leases. They know that the property owner could deliver a 60-day move-out notice at any time, and they'll have to find a new place to rent.
While short-term commitments are attractive to many potential renters, property owners can find it challenging to find enough residents okay with paying higher prices and the uncertainty of not knowing when their lease will end.
A Bethesda Property Management Team Helps Property Owners Choose the Best Leases
Now that you know the different pros and cons renters think through when considering lease agreement options, you can make smart decisions about the best approaches to finding renters and maintaining consistent monthly rental income. However, if you're still undecided about whether you should offer a month-to-month or a typical one-year lease, many property owners give a mix of both options.
However, it's crucial to understand your numbers and goals for each rental property. It's also helpful to know which properties in your portfolio would do better with a standard agreement and which would be better suited for a month-to-month agreement. If you're not sure how to analyze the best outcomes, our Bethesda property management team can help!
Renters Warehouse BW Metro has the experience property owners need to maximize revenue with quality tenants, whether choosing long-term rental agreements or monthly options. We can help you with the best strategies to retain renters and optimize cash flow!
Learn more about creating effective rental agreements with our free resource, "How To Create a Custom Lease Agreement."