Reverting to month to month lease at the end of original lease?

Do people usually do this, or create a new one year lease at the end of the original lease?

Also, the lease I purchased says the rent will increase by 8% once the lease goes month to month. Personally, I feel it would be better to say nothing about that in the lease and then decide on my own how much to increase it based on the market and the tenant.

I personally don’t do month to month. I like people in year contracts and I set them up to auto renew. And I also automatically jack the rent through the agreement. Inflation is typically 3% so I’m happy with 5%. If inflation was super high like it will be sometime within the next few years, I will notify all of my tenants at the 2 month mark that if they would like to stay we will be signing a new lease and the auto renew will not be in effect.

a. NOTICE OF TERMINATION: TENANT and LANDLORD may terminate this lease by giving the other party written notice of termination at least 60 days before the date this lease is to end. The effective date of all termination notices shall be the last day of the SECOND full month following the month in which notice of termination is given, unless a later date (which shall be the last day of a calendar month) is stated in the notice. Time is of the essence of this agreement.
b. AUTOMATIC RENEWAL: If nobody gives notice to end this lease, then at the end of the lease term, this lease will AUTOMATICALLY RENEW YEAR-TO-YEAR at a 5% increased monthly rental amount, and the same terms and conditions already in effect.

We do M2M leases for our local ones just so we can get people out if we want. Yes, in theory, it’s nice to have someone locked in for a year, but with a M2M I can simply send a notice of lease termination if someone pisses me off but pays the rent on time. Not saying I’m in the business of kicking out paying tenants, but it’s a nice tool to have if I need it. Our leases on our apartments out of state were for one year because we didn’t want to deal with turnover there (little bit of difference in quality of tenants there too). The leases automatically go to M2M after the initial year. If someone’s been there for a year and wants to leave a few months after that, I’ve got my money out of them and they can go if they want.

Thanks. The inflation situation is another good point. Perhaps it would be better to start out with a seven month lease instead of 1 year, in case that happens.

It takes at least 3-4 years for inflation to take hold after mass government spending of money they don’t have.

I decided to replace the 8% increase part with “Landlord will notify Tenant in writing at least 30 days before expiration of Lease if Landlord decides to increase rent at the time the Tenancy becomes Month to Month”

I like the clause of “Landlord reserves the right to renegotiate rent at any time when the lease is in a month-to-month status.” Of course this means I would stay within state guidelines for doing so.

Thanks Justin. Something like that should work–I’ll look up in the book I have for laws in my state.

I have 50 units or so so I do mostly 12 month leases that go month to month. As for rental increases I do that both when tenants move out and at periodic times for all tenants. You can persuade tenants to sign a new lease at an increased yet discounted rate, just be wary of the terms of the lease regarding renewal. Good luck.