Month-to-Month

What's your "Best Practice" for handling month-to-month holdovers coming off a lease? Do you keep them at the same rate? Do you charge a premium? If so, what's that standard? Do you even allow MTM leases? Also, as part of this discussion, what type of notice do you require to vacate. Sorry, lots of questions. I'm always trying to improve our model and would love some feedback. Thanks.

We take holdovers to market rent and add $100. Our standard notice requirement is 60 days.

All of the properties I managed offered month to month leases at the market rate plus a $100 month to month fee. Residents could be released with a 30 day notice.

We offer a month-to-month option at market rent + $100 premium. The notice requirement is 60 days.

Mark - We go a bit of a different way... after the initial lease term is complete, the lease automatically defers to a MTM, at which point our residents are eligible for an increase (typically $15 - $25 per month), if our company "elects" to exercise that option. Typically, we do, but as an example, we committed to our residents (all properties) that there are no increases thru 2010.

Oooh, Tara, I like that promotion, I bet that's a great sales tool in this economy. It kind of stinks to lose out on that ancillary income from the month to month fees, but I'd imagine the increase in your leasing activity outweighs those fees by a ton!

Morgan - Yeah, it's a really great feature to be able to offer prospects and existing residents alike. Great sales pitch to be able to say that after the initial lease term, we give you flexibility. Just giving them the option is important. (Even though they're so thrilled with us they never need it.)

Thanks for all the feedback everyone. One thing I noticed is that no one (so far) has stated that they don't care for their MTM program. I think that is important. Regardless of your practice, be confident in your approach. Staying consistent really helps with that as well.

So that being said, if you could change your MTM program/policy what would you do?

I would not change our approach. MTMs can be silent Occ killers - they must be managed to some extent.