Month To Month Vs. Yearly Lease
how much additional do you charge for an apartment on a month to month vs. a yearly lease?
I have a tenant I inherited who pays $575 plus electric for a 3 bedroom, very nice apartment. Sec 8 pays $551 and she pays $24. Her lease is up soon and she wants to go month to month (even though she says she doesn't plan on leaving). I do realize Section 8 will pay what they will pay but she is the one wanting something 'special' so she's going to have to pay for it. I'm thinking I should charge more because I won't ever be able to plan anything more than 30 days ahead. This lady also wasn't going to pay her share of December's rent, she thought she would wait until January when she started a new job but I had to set her straight on 12/2 when she came up with her 'plan'.
By the way, I don't think I'd ever start anyone out on a month to month unless I raised their rent substantiallly due to the possibility of moving someone in and having them leaving within a few months and me having vacancy/cleanup.
Regardless of the term of the lease, Section 8 housing authority will have to approve the rent increase. You might check with the housing authority to see if they even allow month to month leases. I had one tenant who signed an annual lease then just extended the lease on a month to month basis. We never did an annual lease renewal. That tenant was with me for four years before he bought the house from me at twice what I paid for it.
I like annual lease renewals because they do provide some income security when you apply for new financing. With annual leases, the mortgage company gives me credit for the rental income when calculating my ratios. I am not sure what they would do with a month to month lease.
I always offer three choices on my places, might go something like this
Annual lease - $550 a month
6 month lease - $575 a month
Month-Month - $600 a month.
On all three I require one full month sec deposit. Even on annual leases you are not guaranteed the money and from talking with other people, a lot of month-month people end up staying a long time so you get free additional cashflow.
GL
BTW: Lenders do like annual leases better if you are going to refi or apply for new loans
[addsig]
Not sure about how section 8 works in your area but where I am they only sign for a year lease with us.
Section 8 in Iowa requires a 1 year lease.
this is basically going to be a moot point because I'm going to evict her. she hasn't paid January yet and when I was at the property today to see another tenant there was an electric company shut off notice on her door for $1036. I've got no idea how someone could run up a bill like this in a year's time but she's only got 3 days to pay up or no electric and I'm quite certain she can't come up with this money when she can't come up with $24 two months in a row. So, if she comes up with the electric company's money and my whopping $24 I'm going to give her a month to month at an increased monthly rental. If she doesn't like it, she'll have to move or get a job if Section 8 won't agree to an increase but this is a nice place & I'll have no problems renting it out quickly. HOW IN THE WORLD CAN'T SOMEONE COME UP WITH $24 A MONTH???