The best scenario for landlords is to have tenants sign a one year lease. This allows the landlord to know exactly how much he will be receiving each month and provides peace of mind that he will not have a vacancy for the next year. A one year lease guarantees the amount of rental income the landlord will receive over the next year. Sometimes at move-in or at the expiration of an existing lease, tenants might request that they rent your unit on a month-to-month basis. Another reason for providing a tenant a month-to-month lease would be when the tenant's application is "not so great."

Month to month leases do not provide the guarantee of a set monthly income for fixed time frame that they would have received if they had a one year lease. Tenants can move out of your unit be giving just a 30 day notice. This leaves the landlord in a position of having to rehab the unit in order to get it ready to be rented to the next tenant. This can be a costly proposition for the landlord. The uncertainty of not knowing if you are going to have rental income coming in next month makes many landlords hate month to month rentals.

Landlords that offer month-to-month leases should charge a premium over the monthly rent offered on a one year lease. This premium compensates the landlord for not having the security of knowing that they will not have a vacancy for the next twelve months. It also allows the landlord to get rid of bad tenants. In most states a landlord can cancel a month-to-month lease by giving the tenant a 30 or 60 day notice.

Landlords prefer to have a year lease for their rental property. But if the tenant refused to sign a year lease, you now have guidelines on how to handle this.