As a landlord, it can be tricky trying to decide what length of lease term to use with new tenants. And what do do when those lease terms expire. Let’s go over some of the different options and their pluses and minuses.

1. Month-to-Month Leases

A month-to-month lease means that the tenant can terminate the lease at any time with a 30-day notice. And, on the flip side, you as the landlord can do this too. A downside of this is that it means that tenants can move pretty much at anytime with little notice. It can mean that as a landlord you are having to clean and re-rent the unit more often. This is more work on your part and more of a chance of the unit to sit empty while you clean it and look for a new tenant.

On the plus side, if you are renting in an area where your typical tenant isn’t there as long or there is a lot of turn over, it could be beneficial. For example, if you often rent to college students with roommates that move in and out a lot, a month-to-month lease could make it easier to add and remove roommates from the lease.

Many leases often default to a month-to-month lease after their initial term expires.

My opinion on these is that they are potentially a lot of work and I would rather sign a longer lease term and then default to this once that term is over.

2. Six Month Lease

You don’t see a lot of info from experts on six month leases. They aren’t very common. I don’t use them much on my rentals either. However, I think they have their place. For example, I have a mother-in-law apartment in my own home where I live. When I sign a new tenant for that apartment, I start with a six month lease. This tenant will be living in close proximity to me and my family and if it isn’t working out, a shorter lease term makes that earlier. I can handle a less-than-ideal situation for six months, but doing so would be difficult for a year. After the six months if things are good, I can then decide if I want to sign a longer lease or let the tenant go month-to-month.

3. One Year Lease

This is by far the most common lease term. It’s nice as a landlord because you know you won’t be having to turn over an apartment for a year and that you’ll have a guaranteed rent payment during that time frame. It’s also typically an easy lease for a tenant to agree to because they usually know that they can commit to something for 12 months.

This is a good time frame too because after a year is a great time to reevaluate rental amounts and adjust them as desired.

4. Two+ Year Lease

Two year and longer leases are much less common, though they have their place for sure. Having a long term lease signed is great for that security of a rent payment and no turnover. This could be a great option for a lease for a more established family that wants to be in a particular place as their children go through school.

A downside is that rents typically increase over time with inflation. If you are tied to a 2-year or longer lease, you will have to wait longer to raise those rents. And if a tenant’s situation changes, you may run into the headache of broken leases more often then in shorter lease terms.

Those are my thoughts on the different lengths of lease terms. If you have any questions, let me know!