As it stands, about 36% of American households are occupied by renters.
Owning rental properties can be a great way to make money - as long as you go about things the right way. There are various investment strategies and options, so you need to determine what will work best for you.
One of the many options to consider is lease lengths. There's no "right" lease length, so you need to consider the options and how they align with your goals.
In this guide, we'll examine short-term rental leasing so you can get a better understanding of it. Keep reading for more.
What Is a Short-Term Rental Lease?
A short-term rental lease is a lease agreement for a property that lasts for a short period of time. In most cases, this is 30 days or less, but it can be more in some states and jurisdictions.
The Benefits of Short-Term Rental Leasing
There are numerous advantages to short-term leasing. Some of these are beneficial for the landlord, some for the renter, and some for both.
Many leases last for a minimum of six months or a year. In such cases, people are locked into their leases for this period.
A short-term lease offers much more flexibility. A tenant could sign a new lease each month but move on more easily when they're ready to.
As a landlord, longer leases can help as they secure tenants for longer periods. This means you don't always have to worry about finding new tenants whenever the old ones move out.
The problem here is that the terms of a lease are locked in for its entire duration. With shorter leases, you have more freedom to make adjustments. This is beneficial when you want to change the terms of your rental lease.
When someone is willing to sign a longer lease, the landlord will often offer a lower rent as it can be more convenient for them. If you're offering short-term leases, you can justifiably charge more to increase your rental income.
Drawbacks of Short-Term Rental Leasing
While these advantages can sound ideal, there are also some disadvantages. You need to consider these too.
Higher Vacancy Rates
One of the main reasons a lot of landlords prefer long-term leases is that they don't have to worry as much about their property being empty. Shorter leases generally mean higher turnover, so it's more likely you'll end up with a vacant property at times.
Risk of Tenants Breaking Their Lease
For tenants, committing to a longer contract can bring more risk. If they need to unexpectedly break their contract, it's far more viable with a short-term contract.
With a longer lease, they'll often need to give at least 30-60 days' notice, which may not be ideal for them. If you have tenants on a shorter lease, it will be easier for them to break their lease.
The Right Leasing Strategy for You
To determine the best rental leasing strategy for you, consider your investment goals and how each option aligns with them. Whatever you decide to do, you can make things easier by working with a property management company in Annapolis, Maryland. Get in touch with the team at PMI Annapolis to find out how we can help you with your rental properties.