Month-to-month leases offer renters flexibility, but what other advantages and disadvantages should you consider before signing the dotted line?
Navigating the rental market isn’t easy. Between bait-and-switch listings on sites, deceptive landlords, and confusing legal language in lease agreements, finding the right apartment can be a time-consuming, mentally taxing process. But before you even begin your search, you’ll need to determine whether you’re looking for a short- or long-term lease.
Not sure where you stand? Consider these advantages and disadvantages to month-to-month leases — then decide what makes the most sense for your needs.
Pro: You get greater flexibility
If you’re thinking about buying a property in the near future, or moving to a new city, a short-term lease gives you more flexibility and can save you money in the long run. When you sign a 12-month (or longer) lease, you’re legally obligated to pay 12 months of rent even if you decide to move before the lease expires.
Granted, “some landlords will let you terminate a 12-month lease early if you find a new renter to take your place,” says Joe DeFilippo, a real estate agent and rental specialist with City Chic Real Estate in Washington, D.C.The Pros and Cons of Month-to-Month Leases Click To Tweet
However, if you want to be able to move on short notice without paying a penalty, a month-to-month rental is your best option. Bear in mind you’ll still need to give the landlord at least 30 days’ notice (or more, depending on the lease agreement).
Con: You pay more in rent
Owners want rental property occupied at all times so they can continually collect rent. But when a tenant moves, finding a replacement can be a hassle — and there’s a chance the unit will be vacant for a while. Therefore, month-to-month renters pay a premium.
How much more you’ll pay depends on the market. In Washington, D.C., month-to-month leases cost on average 50 percent more than 12-month leases. In Manhattan, landlords usually charge 15 percent to 20 percent more — and rent is high in New York.
Pro: You can (usually) switch to a long-term lease
In general, if you’re a good tenant, the landlord will be open to you converting to a 12-month lease, but there are some circumstances where that’s not the case. For example, if the owner is planning to make the property their primary residence in the near future, you’ll eventually need a new place to live. Find out what the landlord’s motivation is before signing a lease.
Con: Your rent isn’t fixed
Arguably the biggest benefit of signing a 12-month lease is that you get to lock in your rental rate, which makes it easier to manage your budget.
Meanwhile, when you’re on a month-to-month lease, the landlord could decide to raise your rent on a whim and — depending on where you live — may only need to give you 30 days’ notice.
Pro: Many are fully furnished
Some apartments are specifically designed for short-term renters and come furnished. Residential buildings near universities, for instance, are ideal for summer interns, who are often willing to pay more since they don’t have their own furniture.
Con: Moving ain’t cheap!
A month-to-month lease might make sense in the short term, but if you start going from one short-term lease to the next, you’ll burn money that you could be saving for a down payment.
Even if you don’t hire a professional mover, your lease may require fees to cover your application, utility transfer, and cleaning. Also, some buildings charge new tenants a move-in fee of up to $500.
Moreover, there may be lag time in terms of your previous landlord releasing your security deposit. Not to mention that packing boxes and carrying heavy furniture isn’t exactly a pleasure cruise.
Con: You may have to do some digging
Landlords tend to prefer a long-term lease, since it offers guaranteed income over a set period of time, and reduces the risk of the property sitting vacant in between tenants. Hence, you have fewer options if you’re looking for a short-term rental.