By Neil Fjellestad & Chris De Marco
We have noticed an uptick in the number of our renters opting for a month-to-month rental agreement at renewal citing personal current concerns about contractual commitment. Such agreements are only offered at a rental premium and we generally advise our rental owners that a long term lease attracts and best serves qualified renters. We will consistently choose to retain our existing residents as their lease expires because the owner(s) will experience an interruption of rent and out-of-pocket costs connected to the turnover. So residents that have paid their rent on time and kept up the rental home will get preferential treatment at renewal though with the current housing conditions the likelihood is that a nominal rent increase will be included.
Due to projected supply and demand for well-located rental homes, condos and apartments rental rates will continue to increase for the next few years. Actually this condition is healthy in order to encourage existing and potential investors by allowing rental increases across the board that can repay out-of-pocket expenses endured during the last several years and/or to accomplish repairs and improvements that they have deferred.
As a month-to-month tenant you are not protected from multiple rent increases and owners will more likely postpone requested maintenance until you move. There are still some owners that are consolidating their property holdings to preserve equity and credit worthiness. In some cases, this results in vacating their rental properties. Certainly having a renter on a month-to month agreement makes this decision easier.
While an owner’s decisions can affect their credit, it often has a much greater affect on the renter(s) living in that home. Once a property is in foreclosure or it is given back to the bank a real estate company is hired to sell the home/property. It is often the decision to vacate the property as it is believed to be much easier to sell an empty property.
By being a preferred renter on a long-term lease no one can decide to raise your rent because they feel like it. No one can ask you to vacate the property on a whim or with a short term notice. If the property is marketed for sale and/or changes ownership your lease will normally be honored by authorizing you to live there through the duration of the lease term, or provide you with some compensation if they want you to vacate.