What Is Month-to-Month Tenancy?

How Month-to-Month Tenancy Works

A month-to-month tenancy is exactly what it sounds like. The tenant rents the property one month at a time. There is no lease end date to worry about. The arrangement continues indefinitely until someone decides to end it.

Most month-to-month tenancies start one of two ways. Either the landlord and tenant agree to a month-to-month arrangement from the start, or a fixed-term lease expires and automatically converts to month-to-month under state law or the lease terms.

The key feature is flexibility. You can change the rent, update the terms, or end the tenancy with proper notice (typically 30 days). The tenant can also leave with 30 days notice. Neither party is locked in.

Pros and Cons for Landlords

Pros:

• Flexibility to raise rent with 30-day notice instead of waiting for an annual lease renewal
• Ability to end the tenancy relatively quickly if needed (30-60 days vs. waiting out a 12-month lease)
• Can charge a premium: many landlords add $50-$100/month to the month-to-month rate since you are taking on more vacancy risk
• Easy to update lease terms as laws or your policies change

Cons:

• Tenant can leave with only 30 days notice, potentially creating a vacancy during a bad time (December in a college town, for example)
• Less income predictability for your rent roll and financial planning
• Higher turnover risk means more frequent turnover costs
• Harder to get mortgage approvals since lenders prefer stable, long-term leases

When Month-to-Month Makes Sense

Month-to-month is a good fit in several situations:

Between fixed leases. A tenant's lease expires in February, and you do not want to sign a new 12-month lease that would end in February again (bad time to fill a vacancy). Instead, go month-to-month until May or June, then offer a new 12-month lease that expires the following summer.

Long-term tenants. A tenant who has been in your unit for 5+ years and always pays on time does not need the structure of a fixed lease. Month-to-month gives both of you flexibility while the relationship continues on trust and track record.

Properties you might sell. If you are considering selling a property in the next 6-12 months, month-to-month tenancies make it easier for a buyer to take vacant possession. An occupied property with a long-term lease limits the buyer's options.

Seasonal markets. In vacation or college town markets, month-to-month during peak season lets you adjust quickly. You might want the unit back in May for summer rentals at a higher rate.

Real Example: Fixed vs. Month-to-Month Strategy

You own a 3-bedroom house that rents for $1,600/month on a 12-month lease. The lease expires January 31. Your options:

Option A: Offer a new 12-month lease at $1,650. The next expiration will be January 31 again. If the tenant leaves next January, you are filling a vacancy in the dead of winter. That could take 4-6 weeks and cost you $2,400-$4,000 in lost rent.

Option B: Convert to month-to-month at $1,700 ($100 premium for flexibility). Wait until April, then offer a 12-month lease at $1,650 starting May 1 through April 30. Now if the tenant ever leaves, you are filling a vacancy in spring or summer, the prime rental season.

Option B costs you a few months of month-to-month risk but sets you up for better lease timing going forward. And the $100 premium covers some of that risk.

How to Handle the Transition

Step 1: Check your lease language. Many leases have an auto-conversion clause that switches to month-to-month at expiration. If yours does, the transition happens automatically. If not, you may need to sign a new agreement.

Step 2: Notify the tenant in writing. Even if the conversion is automatic, send a letter confirming the new arrangement, the monthly rate (if changed), and the notice requirements for either party.

Step 3: Adjust your rent if appropriate. A month-to-month premium of $50-$150 is common and justified. You are taking on more vacancy risk, and the tenant is getting more flexibility. Both should be reflected in the price.

Step 4: Update your records. Note the change in your rent roll and tracking system. Month-to-month tenants need closer monitoring since they can give notice at any time.

Common Mistakes

Not charging a premium. Month-to-month tenants get maximum flexibility. You should charge for that flexibility. If your standard lease rate is $1,500, your month-to-month rate should be $1,550-$1,650.

Forgetting notice requirements. In some states, landlords must give 60 days notice to end a month-to-month tenancy or raise rent, even though tenants only need to give 30 days. Know your state's asymmetric notice rules.

Letting it drift indefinitely. A tenant on month-to-month for 3+ years without any rent adjustments is probably paying well below market. Review month-to-month tenants at least every 6 months and adjust rent to stay near market.

Ignoring rent control limits. In rent-controlled cities, your ability to raise rent or terminate a month-to-month tenancy may be limited by local ordinance. Just cause eviction rules often apply.

Frequently Asked Questions

How much notice is required to end a month-to-month tenancy?

Most states require 30 days written notice from either party. Some states require 60 days for landlords. Check your specific state law as requirements vary significantly.

Can I raise rent on a month-to-month tenant?

Yes, with proper notice. Most states require 30 days notice for a rent increase. Some require 60 or 90 days. The increase takes effect at the start of the next monthly period after the notice period expires.

Does a month-to-month tenant still have a lease?

Yes. A month-to-month tenancy is still a legal rental agreement with all the rights and obligations of any tenancy. The only difference is the term: it renews monthly instead of lasting a fixed period. All other lease terms (maintenance responsibilities, rules, etc.) still apply.