What You Need to Know: Short or Long Term Leases
What Is a Short-Term Lease?
A short-term lease is just that - leasing a property or apartment for a short period of time. These leases generally are six months or less, and many of them will be on a month-to-month basis. Short-term leases can benefit landlords as well.
In this article, we are talking about how these temporary leases can work well for tenants and landlords.
How Short-Term Leases Benefit Tenants
Here are some of the key benefits of short-term leases for tenants:
- Flexibility - The main allure of a short-term lease is its flexibility. If the tenant gives the landlord a heads up they’re vacating, they can move out more quickly than they would with a long-term arrangement. It’s a great luxury to get a short-term lease when moving to a relocating area. You can keep an eye on the rest of the market and move if you find a more suitable place. This is a great option if you start a new job and need to find a temporary place to stay before you can buy property or find a more permanent residence.
- Amenities - Depending on the place you lease, many property owners offer amenities to attract more tenants. One of these amenities is furniture. If you’re searching for a temporary residence, you want to find a place that is already furnished. This will help you avoid moving fees.
- Great situational living arrangement - Short-term leases can be ideal for multiple situations. If you need a place to stay for a college semester, an internship away from home, or if you are on an extended vacation or sabbatical, short-term leases can provide a place to lay your head without any long-term commitments.
What Are the Disadvantages of Signing a Short-Term Lease?
With any decision, there are pros and cons. Knowing how a short-term lease benefits you, here is what you need to be aware of before jumping in.
- Landlord fluctuation - With these leases, landlords have a lot of power. The landlord can make adjustments to the agreement once the lease period is over and you have transitioned to month-to-month. The changes can be as minor as a late fee amount to as significant as the rent you owe or the pet policy.
- Lease termination - Included in this landlord control, the partnership goes both ways. Just as the tenant can move out on their terms once the lease has run its course, the landlord could limit the amount of time you can remain on a month-to-month agreement.
- Costlier option - Usually, short-term leases don’t come cheap. Considering tenants signing short-term leases won’t be around for the long term, landlords may want more money upfront; therefore, the prices may be higher.
You might feel like it would be better to invest in more permanent housing rather than maintaining the short-term living arrangement.
What Benefits Landlords of a Short-Term Lease?
There are two sides to every story. If you’re a landlord, you might be wondering if short-term leases could benefit you and if you should be offering these to prospective tenants.
- Higher lease rates - While it’s pricier for the tenants, landlords can benefit from the expectation that short-term lease rates can be higher. Charging higher rates can provide additional cash flow.
- Providing a need - Imagine the number of people relocating for work and other situations who need a short-term living arrangement. They will go to places that meet their needs. It could be a wise decision to provide short-term housing, especially if you have multiple properties.
- Perfect for snowbirds - Do you have a house in the mountains for the summer and the coast for the winter. During the months you are not living in your mountains, short-term leases allow your house to generate passive income.
What Are the Disadvantages for Landlords of a Short-Term Lease?
If you’re a landlord, you need to be aware of these disadvantages that could cause issues for you down the road.
- Vacancies are likely - The benefit of a long-term lease is assurance that money will come in for a sustained period of time. With short-term leases, you’re going to have higher turnover and more vacancies. How do those vacancies get filled? To limit them, you’re banking on demand being high, and you’re going to have to advertise your property well.
- Bad tenants could be more likely - While this isn’t a guarantee, a short-term lease could open you up to the potential for bad tenants. When people are less committed, they might be more likely to trash your place, be less reliable with rent payments, or be annoying neighbors.
Before You Start Offering Short-Term Leases:
If you decide to enter a short-term lease agreement as a tenant or a landlord, you should not do it on your own. You need a property management company to handle your short-term leases, and that is where Asheville Phoenix Properties can help.
Contact us today to help you navigate short-term leases. We will answer your questions and help you determine whether this is a good option for your property. Our team can help you reduce vacancies and find the best tenants.
If you have a rental property in western North Carolina, Asheville Phoenix Properties has the experience and expertise to make it as profitable as possible.