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Neil Fjellestad's Blog


By Neil Fjellestad | Property Manager in San Diego County, CA

Rent Sense: Is Month-to-Month Rental Best?

By Neil Fjellestad & Chris De Marco

FBS Property Management

Some renters prefer a month-to-month rental agreement citing the high unemployment situation in San Diego or their personal current concerns about contractual commitment. It has always been our belief that a long term lease attracts and best serves qualified renters. The loss from reoccurring moving costs completely overshadows any benefit of remaining free to do so. 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.

There could be a misperception that rents (like other goods and services) are trending down or might become subject to downward negotiation if they maintain a 30-day agreement. Quite the contrary is true when you take a closer look at the local rental economy. Due to projected supply and demand for well-located rental homes, condos and apartments rental rates will increase (2-3%) this year and (3-5%) in 2013.  

Most rental owners are seeking to raise rents across the board in order to 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 likely postpone requested maintenance until you move.

Other rental owners are selling their primary homes at a loss and/or consolidating their property holdings to preserve equity and credit worthiness. In some cases, this results in vacating their rental properties in order to have a place to live themselves.  In addition, some local rental property owners are choosing to default on their rentals in order to try and save their primary residence.

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 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. And most importantly, if a property is foreclosed upon, an agent/bank must either abide by the contract, authorizing you to live there through the duration of the lease, or must provide you with compensation if they want you to vacate. 

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