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The Pros and Cons of Month-to-Month Rentals

As a landlord in Waco, TX, you may wonder whether month-to-month rentals are a beneficial option since they appeal to many tenants and landlords for various reasons. If you are unsure if a month-to-month rental arrangement would work well for you, consider the following pros and cons:

The Pros of Renting Month-to-Month:

1.) Providing tenants with more flexible housing arrangements can appeal to a larger pool of tenants, such as those looking for a place to live temporarily (for example, a family that is having a home built or that will be moving to a new state). Because month-to-month rentals are not as popular, they are usually in high demand.

2.) Because you are changing tenants frequently, you have the opportunity to increase the rent with each new lease agreement. With the cost of housing rising within Waco, TX, the ability to raise rent several times a year is an excellent benefit for many landlords, especially those that have seen hikes within their expenses.

3.) Renting month-to-month provides landlords with a quick turnover – allowing them to update the property as needed or even sell it if they are looking to without negotiating tenant terms for the new buyer. This is especially important to consider if you plan to sell your rental home within the not-so-distant future.

The Cons of Renting Month-to-Month:

1.) Renting month-to-month could result in a loss of income if there are several months in which you cannot obtain a new tenant or if you have a new tenant that simply refuses to pay. Though there is a risk of a loss of income with standard lease agreements as well, high turnover can increase those risks substantially.

2.) With increased turnover comes the need to screen tenants and market your rental home, which is challenging for many landlords. The problem is, tenant screening is needed to mitigate risk, while effective marketing is key to ensuring your property remains inhabited month-to-month – so neither can be overlooked.

3.) With increased turnover comes the possibility of more frequent repairs and deep cleaning, which is an additional cost to budget for. This is especially true if your property allows for pets or smoking, which requires an extra deep clean before new tenants can move in – regardless of how short-term it may be.

A Happy Medium

Some landlords choose to rent for six or 12-month intervals instead of renting monthly while providing tenants with a “month-to-month” option. So, if the family that is having a new home built faces delays, they can easily extend their agreement, which can benefit the tenant and landlord alike.

With over 30 years of combined expertise in Residential Property Management, we have helped countless landlords across Waco, and Central Texas navigate month-to-month and long-term lease agreements. We are locally owned and operated and dedicated to ensuring your investment property grows in value for years to come.

Contact us today to learn more about the comprehensive services we offer: 254-651-0576. We would love to hear from you!

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