Is a Short-Term Lease Agreement Better Than a Long-Term Lease?

Property owners often have questions about using long-term lease agreements vs. short-term lease agreements. Of course, both have advantages and disadvantages (depending on your goals), but understanding the distinctions can assist you in making the best decision for your rental property.

Today, our team will guide you through each type of lease agreement and how to pick the best one for your rental property and investment goals!

What Is a Short-Term Lease Agreement?

A short-term lease agreement is a rental contract lasting less than six months, offering flexibility for both property owners and tenants. However, short-term leases are not the same as month-to-month lease arrangements.

Short-term leases work well in high-demand areas with low inventory, allowing investors to adjust rental rates more often. They also help property owners be more selective with tenants since the commitment is only 3–6 months. 

Benefits of a Short-Term Lease

A short-term lease contract offers more flexibility for the tenant and landlord. 

For example, tenants can rent without a year-long commitment if they don’t plan to stay in the area long. It also gives renters the flexibility to make sure a property is a good fit before renewing or moving on to another property.

A short-term lease is often more flexible when adjusting rental prices. Property owners can raise or lower the monthly rent amount more often—this allows you to stay competitive as the market shifts. 

A short-term lease also lets investors use the property as a vacation home for part of the year while renting it out the rest of the time.

There are many reasons why a short-term lease might be preferable to a long-term one, but it's essential to consider all of your options before making any decisions.

What Is a Long-Term Rental Agreement?

In contrast to a short rental agreement, a long-term residential lease agreement is a contract that is signed for longer than six months. This type of lease agreement allows the landlord and tenant to continue their arrangement with less turnover for longer periods. 

Whether opting for a short-term or long-term lease, landlords should thoroughly screen tenants to ensure they’re a good fit for the property.

Benefits of a Long-Term Lease Agreement

Choosing a long-term lease contract offers several advantages for property owners, providing stability and cost savings over time. 

Here are some key benefits to consider:

• Fewer Vacancies: Longer lease terms mean fewer turnover periods, reducing the risk of extended vacancies.
• Stable Rental Income: Property owners secure a set rent amount for an extended period, ensuring consistent monthly revenue.
• Lower Marketing and Turnover Costs: Investors save money by avoiding frequent marketing and property preparations between tenants.
• More Reliable Tenants: Long-term renters are more likely to be responsible and take better care of the property.
• Stronger Community Ties: Tenants who stay longer often build connections in the area, making them more likely to renew their lease.
• Less Wear and Tear: Fewer tenant turnovers mean less frequent repairs and maintenance, helping preserve the property’s condition.

When choosing a lease term, consider the long-term stability and cost savings compared to short-term agreements.

When Should Short-Term Leases Be Offered?

Should property owners only use long-term leases? While the benefits of longer lease terms often outweigh the cons, in some instances, a short-term lease on a rental property makes the most sense.

Shorter leases can be beneficial for a few reasons, including:

• Home renovation: Renovating a home can boost property value but may require homeowners to move out temporarily. A short-term lease provides a convenient housing solution while their home is under construction for several months.

• Relocating for a new job: Some renters may need to relocate to the Hampton Roads area for a new job. While waiting for permanent housing, a short-term lease in your rental property can be a good option for them until they buy a new house or find a long-term rental.

• Tourists visiting for an extended visit: Provide short-term lease options for people who visit the area for several months at a time. 

• Visitors in the area for business: As more businesses provide entirely remote roles, more workers travel for work for brief periods. Offering a short-term lease allows employees from other cities to rent your property until they decide to move on.

Regardless of whether or not you choose to offer short-term leases, it's important to remember that you still need to follow the same rules and regulations for leasing long-term. 

For example, you must maintain the property's condition and provide utilities. In addition, you'll need to charge tenants for any damages that occur during their stay.

Create the Best Lease Agreement With an Experienced Property Management Partner

Leasing a rental property can be complicated, especially when choosing between short-term and long-term rental lease agreements. 

Osprey Property Management has years of experience working with landlords and tenants and leasing options. Contact our property management team today to learn more about our services and how we can help you choose the best lease agreement for your needs!