When you move into a new rental home, you’ll sign a lease agreement stating the lease duration, rental rate, and essential information about the rental contract. Most lease agreements last 12 months, sometimes giving tenants a chance to renew at the end. On the other hand, if your move is temporary, you may look for a short-term lease agreement, perhaps for only three to six months. Either way, there are pros and cons to both. Today, we’ll review some benefits of a longer lease agreement for landlords and tenants. Read along to learn more.
Contents of This Article:
- How Long Is a Typical Lease Agreement?
- What Is a Short-Term Lease vs. Long-Term Lease?
- Benefits of a Longer Lease Agreement
- Negotiating a Longer Lease Agreement
- Leave Your Daily Rental Management to BMG
How Long Is a Typical Lease Agreement?
A traditional lease term is usually 12 months. However, lease terms can vary depending on landlord preferences, tenant needs, or local laws. As such, in some cases, property managers in Northern Virginia may offer longer-term leases, like two or three-year-long agreements. Or, they may offer shorter-term leases, like a 6-month lease or even month-to-month contracts. Generally, these types of agreements are more flexible for landlords and tenants.
Ultimately, lease lengths can differ based on factors like property type, location, and terms negotiated between the landlord and tenant. So, which is best for you? Read along as we go over some options regarding lease durations and the benefits of a longer lease agreement.
What Is a Short-Term Lease vs. Long-Term Lease?
When you think of a long-term lease, your mind may immediately jump to a year-long lease. On the other hand, when you hear the words “short-term lease,” you may think of a month-to-month contract. However, lease agreements can have different term lengths. Here are some of the options around short-term and long-term lease agreements.
Short-Term Lease Agreement
A short-term lease agreement typically refers to a rental contract lasting less than one year. That said, short-term leases can vary widely in length and might include terms like one month, three months, six months, or any period shorter than one year. Short-term leases are often beneficial for individuals who need temporary housing, like students, professionals, or people looking to relocate.
Some of the benefits of short-term leases include flexibility and adaptability for landlords and tenants. For instance, tenants can move out relatively quickly, as they’re not locked into a long-term contract. Also, landlords can adjust rental rates more frequently, as turnovers are more frequent with short-term leases.
However, there are a few downsides to short-term lease agreements for landlords and tenants. For instance, more turnovers typically lead to more administrative work for landlords.
Additionally, they may experience inconsistent income and more vacancies. On the other hand, short-term leases generally don’t give tenants a chance to settle into the community.
When looking at rental properties, it’s important to consider the type of rental agreement you want. Here are some considerations for longer lease agreements.
Long-Term Lease Agreement
A long-term lease is a rental agreement with a duration of a year or more. The most common form of a long-term lease is a one-year lease agreement. However, leases can extend for multiple years, depending on the terms agreed upon by the landlord and tenant.
If you’re trying to decide which option is better, there are several pros and cons to consider while looking at longer lease agreements. For instance, there may be less flexibility for tenants and fewer opportunities for landlords to increase the rent. However, tenants can benefit from stability and long-term housing, while landlords benefit from consistent income and fewer turnovers. Next, we’ll go over some more benefits of longer lease agreements.
Benefits of a Longer Lease Agreement
Longer lease agreements offer several advantages for landlords and tenants. You may value a longer lease term depending on your needs and expectations for a rental property. Additionally, landlords can worry less about turnovers and have peace of mind knowing they have consistent rental income.
Benefits of a Longer Lease for Landlords
- Stability and Consistency- Longer lease agreements provide landlords with a more stable rental income. With fewer turnovers, landlords don’t need to spend as much time and resources searching for new tenants and preparing the property for each turnover.
- Reduced Vacancy Costs- Longer leases help reduce the number of vacancies, minimizing the financial impact of empty properties.
- Lower Administrative Burden- Fewer tenant turnovers mean less paperwork, advertising, and screening of tenants, saving landlords and property managers time and effort.
- Predictable Rent- Landlords can plan their finances more effectively, knowing they have a guaranteed rental income for the agreed-upon lease term.
- Relationship Building- Longer leases foster stronger relationships between landlords and tenants, which can lead to better communication and cooperation throughout the tenancy.
Benefits of a Longer Lease for Tenants
- Stable Housing- Tenants benefit from a stable place to live without the worry of frequent moves. This especially benefits families, students, or people who value consistency.
- Avoid Rent Increases- Long-term lease agreements might lock in the rental rate, protecting tenants from sudden rent hikes, especially in markets with rising rental costs.
- Sense of Home- Longer leases give tenants a greater sense of belonging and attachment to the property and community, as they can settle in for a longer time period.
- Less Frequent Moving Costs- By avoiding frequent moves, tenants can save time, energy, and costs associated with moving.
- Negotiation Power- Tenants who commit to longer leases might have more leverage to negotiate terms, like requesting minor property improvements or alterations.
Negotiating a Longer Lease Agreement
Negotiating a longer lease agreement involves clear communication and finding common ground between landlords and tenants. After all, you’ll want to come up with a mutually beneficial solution for each party. Here are some important steps when negotiating a longer lease agreement.
- Do Your Research
- Express Your Interest
- Highlight the Benefits
- Negotiate Terms
- Get It in Writing
Do Your Research
If you’re a landlord deciding on a lease agreement length, you’ll want to understand local rental laws and regulations regarding lease lengths. Additionally, research the rental market and learn what typical lease durations are in your area. Then, gather information about the property, its condition, and any unique features that make a longer lease more appealing.
Express Your Interest
Whether you’re a landlord or a tenant looking for a longer lease agreement, express your interest from the start. For instance, landlords should state their lease duration expectations in the rental listing and confirm with tenants on their application that they’re willing to sign a longer lease. On the other hand, if you’re a tenant looking for an extended lease agreement, ask your landlord about long-term options from the start.
Highlight the Benefits
There are benefits of long-term lease agreements for landlords and tenants. So, if the other party is hesitant or doesn’t agree with the proposed lease terms, explain the benefits. Emphasize how a longer lease aligns with both parties’ interests, like stable rental income for landlords and a stable living situation for tenants.
Once you’re both on board, discuss specific lease terms, like the rental amount, potential rent increases, security deposit amount, and other relevant conditions.
Whether you’re the landlord or the tenant, be flexible and willing to compromise to find terms that work for both sides. Additionally, address any concerns raised by the other party, and provide reassurance and potential solutions to ease any doubts.
Get It in Writing
Once both parties agree, formalize the agreement in a written lease contract. Landlords and tenants should carefully review the lease agreement with each other and make sure all parties understand and are comfortable with the terms. Then, ensure both parties get a copy of the signed lease agreement and record-keeping.
Leave Your Daily Rental Management to BMG
Learning about different renting options as a landlord or tenant helps you find and negotiate rental terms that benefit you. For instance, if you’re looking for stability or long-term rental income, you may be more inclined to sign a longer lease agreement. However, if you don’t want to be locked in at a rental rate for too long, or you want the flexibility to move in less than one year, you may benefit more from a shorter lease. Either way, you’ll want to discuss your needs and expectations with your landlord or property manager to devise terms that work for all parties.
Finding qualified tenants and managing different rental contracts for several properties can be challenging for just one landlord. If you find yourself overwhelmed with all the day-to-day tasks of owning rental properties, it may be time to hire a property manager. Luckily, Bay Property Management Group offers comprehensive rental management services, including tenant management, maintenance, inspections, and more. Contact BMG today to learn about our services throughout Baltimore, Philadelphia, Northern Virginia, and Washington, DC.