State Specific Question About: NEW YORK (NY)

What are the pros and cons of a month to month lease?

Your local landlords can explain with housing court experience the good and bad with each.

In Texas, I can't garnish.

Even if I could, my tenants aren't the sort to have any assets to go after.

My tenants are also more likely to need to move unexpectedly due to life changes. Having a child and needing more space, getting a new job in a nearby town, breaking up or divorcing, getting injured while on the job--- they're not the kind of people who can successfully pull off those major life changes without it affecting me.

If they ever wanted to pull up stakes and move, they will-- regardless of how much time was left in their lease.

Keep'em on a Short Leash.

Living and landlording in Western PA, I do not like winter vacancies due to the limited number of good prospects between Nov - Feb. I do annual leases and have all leases end on April 30. (The first year lease period is structured to end on April 30 so may not be exactly 12 months).

I allow tenants to terminate leases without penalty during the months of April - September. Tenants wanting to terminate a lease from Oct - March pay an early termination fee (ETF), which is outlined in their lease. My ETFs are relatively modest - $600 for the months of Oct and March, $1200 for months of Nov, Dec, Jan and Feb. My past tenants are a main recruiting tool for future tenants so I ensure that our landlord / tenant relationship ends with both sides feeling positive and satisfied.....I was once a tenant and remember (and model) the landlords who did not fleece or nickel and dime tenants on the way out the door.

My 15 units are in B quality, small multi-unit apartment buildings and I have no problem filling vacancies during the nicer months of the year (Apr - Sept).

In NC, each party only needs to give 7 days of intent to leave a month2month lease. That is not enough time to find a good tenant.

Yes, tenants will break annual leases if they need to, but if they do, I can legally use their Security Deposit to cover at some of the lost rent, if any. I can't do that if they give proper notice, even if proper notice is ony 7 days. So all my leases are annual, which require minimum 30 days but the lease says 60.

But Jeffrey teaches COOPERATION as the number one thing to look for in a new tenant, and because I do that these days, even tenants who must break their lease have been cooperative with showings and helping me get it rented, because if I do, they DO get their deposit back.

In my area, tenants are not usually breaking leases to move to another rental in the area. #1 Reason these days is buying a house. They cooperate because they don't want issues with the bank! #2 Reason is leaving the area. What can you do? They've lost their job or something. #3 reason, a distant third, is a couple breaking up and going their own way. Again, nothing to be mad about.

It's just preference I think.

Year Lease (or a length of time) - locks in both the tenant and LL. Good and bad. Good: no rent increases, "secured" for the timeframe of lease.

Bad: no rent increases (but if it's only 1 year max then you can change it accordingly if needed), possibly more difficult to get the tenant to leave early if they continue to pay the rent but are a PITA. Not that it can't happen - but it's potentially more difficult.

M2M Lease: Good - more "freedom" on both. If tenant's life changes and they need to move they can. Also if LL wants to increase rent or the tenant is a PITA - give them 30 days notice and out they go (or up the rent, etc). You can have them leave for NO REASON (they can also leave for no reason).

Bad: Nerves (for both T and LL) - if you have a "weak or worried stomach" about the tenant leaving every month this isn't for you. Same goes for the T - if they think "oh man, I hope I can stay another month and they don't raise the rent or ask me to move" - probably not for them.

Obviously the "good and bad" can be interchangeable depending on how you want to look at them.

I personally, prefer a year leases. I do not like month to month. If I encounter a LL that says "I prefer month to month so I can evict them when I want" I typically think (not always) that they also most likely place the first person that comes along with the cash.

Check you state law!

CA has changed its concept of residential lease to be a matter of contract law rather than the centuries-old matter of property law. As such, both landlord and tenant have more flexibility to conduct their affairs as their lives dictate, while ensuring that damages are reimbursed.

This type of change has become popular in more than just CA. See if NY has made such a change.

I only use month to month agreements. I don't advertise that it is such, when I have an approved tenant, I tell them. Each is written for the specific tenant and unit, so I can add or subtract whatever makes me comfortable as well as the tenant.

I like that I can ask a PITA or problem tenant to leave with a calendar month notice (or raise the rent to make it worth my while). I don't have to look for "lease violations". Of course they can leave too, but since I try to avoid those looking for short term tenancy, they seem to stay a long time. Shortest is now 5 years now. Yes, they can possibly leave in winter, but no one really wants to move at time either (unless they are problem tenants).

I generally do m2m leases. Although here recently, I've taken to combining that with a six month renewal during the months of October to March. That won't stop them from moving, but at least I can hang onto the SD.

I want to use month to month for problem tenants at higher rent. We want them to move out.

Okay, with 100 rentals, some on the beach and others near schools, if I don't use my head and structure my leases so that they will NOT end during a "Hard rental time", I will be stuck with empty units that I'll have to discount.

Example: on the Beach during the summer and warm months I used to get $1000 a month for a hole in the wall. Zero bedroom box with a bathroom and wet bar/microwave. No parking.

Then if it vacant during the cold winter, I could only get $695 a month and I'd have to include parking.

So why would I give someone a month to month lease. I can loose my shirt during off rental times.

Nicole,

This can be a local issue, dependent on YOUR local judge. Get with a nearby association and ask experienced, profitable LLs how quickly the court reacts on evictions.

Me? Turnover is the LL's enemy. National Apt Assoc says average turnover cost is $3100 when you consider lost rent, cleaning/repairs, advertising, showings, applications...

We work hard to ELIMINATE turnovers by focusing on RETENTION. An annual lease is a plan for retention.

Next, LLs needs to stay in control. M2M gives up control.

We do ANNUAL LEASES only. Longevity ans retention make us more profitable.

My lease is clear: "This lease renews automatically on the anniversary date each year with a 2.9% Cost Of Living increase, unless the resident provides the enclosed NOTICE TO VACATE form at least 60 days prior to the anniversary date."

We bring in an Early Lease Termination Fee approx each month. Those range from $1000-2600. That's a lot of money I would LOSE by going M2M.

We cannot chain people to the house. They leave when they want. We CAN offer them a way to legitimately end the lease on THEIR schedule. My judge commented it gives the resident choice and freedom.

We have no trouble renting "normal" homes during winter. In fact THIS winter beat our average for the "nice" months.

In MY state I can refuse to accept the rent which the judge can evict them for non-payment. Check with your court.

Also, a good manager must have confidence because he/she has a thorough screening system. The 2 Minute In Home Visit makes a WORLD of difference in screening.

Good managing minimizes problems like trash, noise, etc. In the last 1000 leases I cannot recall ever wanting to get rid of a resident for anything other than lack of payment.

My thoughts.

BRAD

My experience is like Deanna and Ally. Especially the part about ‘being chained’ .

I have a tenant that has been wanting to find a three bedroom for quite some time. Because she is MTM, she can keep looking, but doesn’t feel like she has to take something just because her lease comes up for renewal.