Skip to main content

Property Management | Landlord Education Blog

Short-Term vs Long-Term Lease Agreements: Which Is Better?

Short-Term vs Long-Term Lease Agreements: Which Is Better?

The average rent is around $1,326 in the United States.

While this is the average for most households, it’s not the most that you can make as a property investor. This is because you can charge more per month for short-term leases. Platforms like Airbnb have made it easy for homeowners to list their homes online for short amounts of time.

Despite the clear benefits of this strategy, there are a few things you should keep in mind about long-term lease agreements. This will help you make the right decision when it comes to what kind of lease you want to offer for your property.

Interested in learning about the different lease agreement options you have? Here’s a quick breakdown to help you make the right decision.

Short-Term Lease Agreements

When it comes to lease agreements, there are two main options that you have. Short-term lease agreements are usually less than six months but can also be for a few days. Platforms like Airbnb let you list your property online so that people can book a place for a single night if needed.

Benefits of a Short-Term Lease

The clear benefit of short-term lease agreements is that you can charge more every month. If you’re letting out your property on a nightly basis, you can make even more at the end of the month. However, there’s no guarantee that you will have tenants in your property throughout the month, so it comes with far more risk.

Long-Term Lease Agreements

Long-term lease agreements can last anywhere from a single year to a decade. Many businesses like locking down long-term leases so that they have stability and security for their business. Property investors also love these kinds of agreements because of the lack of risk every month.

Benefits of a Long-Term Lease

The key benefit of a long-term lease is that you have consistent rental income every month. You don’t have to worry about lots of people booking your home every month or the expenses that come along with that. Instead, you can keep one tenant paying you every month for a long time.

This is incredibly important if you have to manage expenses for the property at the same time. If you have a mortgage that you need to pay, having a stable income is essential. This will ensure that all your expenses are covered and you enjoy a small profit every month.

Finalizing Your New Lease

When it comes to finalizing your next lease, it’s vital to compare all your options. There are significant benefits that come with both short and long-term lease agreements. However, long-term lease agreements are often the better choice for people who want a stable passive income.

Whether you want to sign a short-term or long-term lease, hiring a property management company is always an advantage. This is because property management companies can handle all the day-to-day admin that goes with investing in property. Click here to learn more about how our services can help you.