Updated January 13, 2022
Month-to-month leases can be a helpful option for residents who need an extra month or two in a property before moving out or signing a lease renewal. A month-to-month option might also be helpful to assist residents through a crisis or recession as a short-term solution before renewing a lease.
However, getting stuck in a cycle of month-to-month renters is a fast way to lose money (and clients) from your property management business.
Investors won't stand by you and return to your services if your lease renewal process isn't thorough and effective. Here's how a property management company should manage the lease renewal process to delight your property owners and residents!
While flexibility can sometimes benefit renters and property owners, too many month-to-month leases can lead to unstable income and insecurity. Month-to-month leases should be a temporary option used for situations that truly call for an additional month, such as the following scenarios:
A renter who hasn't committed to a full lease term and a new lease means you could lose their monthly rental income without enough notice to find a new resident. Offering a month-to-month solution shows flexibility when a renter needs it, but property managers shouldn't offer this option as a regular habit.
If you find yourself in an ongoing cycle of month-to-month renters, it's time to fix your process! Property investors depend on their property management company to guarantee renters and signed leases. Renters also need to know they have a real place to live for the next twelve months.
You'll quickly lose business if you're not on top of your lease renewal strategy and workflows!
Sometimes month-to-month leases are a symptom of poor planning. If you're never sure when it's time for a lease renewal, a month-to-month situation becomes your only option until you prepare a new lease agreement and work with the renter to sign it. If a resident decides to move out, you'll have to scramble to find a new resident without a significant vacancy time.
Review your renewal workflows, and find where your lease renewals are falling through the cracks. If you're not sure what's wrong, a property management consultant can offer expert advice to help you recognize the flaws in your workflow, then put solutions in place to fix it!
Documenting your property management processes and using technology ensures you never miss an opportunity to process a renewal on time. Starting the conversation early with your resident gives everyone time to sign on for another year or find a new renter if your resident decides not to renew.
Your leasing process should include:
Make sure your resident understands any changes that will take place with a new lease term. Offer incentives and provide excellent service throughout a resident's lease term to encourage them to renew!
When you plan for lease renewals, you increase your chances of starting a new lease term with a signed, fixed-term lease—either with the same resident for another lease term or a new renter in the property. You also reduce your dependence on month-to-month leases as a temporary aid while you catch up on lease renewals.
If that sounds like a lot of work—or you're not sure the most effective way to set lease renewal reminders—let a property management company consultant help! Relying on sticky notes or reminders programmed into your phone might not be the best way to stay on top of your lease renewal process. However, tracking your leasing process (and other areas of your property management processes) with the latest technology can help you retain renters and clients and increase revenue.
Contact us for a free meeting to find out how we can help you reach sustainable growth!