Short-Term vs. Long-Term Leases for Wilmington Rental Properties

Landlords have plenty of choices to make when it comes to making money from a rental property. One choice is whether to use a short-term or a long-term lease agreement. 

Most real estate investors prefer the security of knowing they will have consistent rental income every month with long-term leases. Still, some owners may prefer the flexibility of a short-term lease instead. The best property management company Wilmington offers can help property owners create a residential lease agreement, but owners need to understand the differences between each agreement. Keep reading to learn about short-term vs. long-term rental agreements!

What is a Long-Term Lease Agreement? 

A long-term lease is an agreement where a renter commits to living in a rental home for a twelve-month lease term or longer. A typical term length may be one year, but this can vary depending on your renters and how long you'd like to stay. Sometimes residents commit to a multi-year lease because they enjoy the home and can lock in a rental rate for several years. 

This type of rental agreement gives investors a guaranteed stream of rent payments for at least twelve months. Long-term leases also help property owners avoid frequent tenant turnover. 

What is a Short-Term Lease Agreement?

A short-term residential lease agreement lasts anywhere from three to six months or can convert to a month-to-month lease agreement until the tenant decides to move out. A resident and property owner will still need to give notice if something changes (usually 30 days in Massachusetts). 

There are advantages that come with this type of rental agreement. For example, property managers might recommend a short-term lease for your residents if you deal with any of the following situations.

• Job relocation. Many residents must suddenly relocate to a new city or state for employment. As a result, they may need temporary housing until they find a new house or locate long-term housing.
• Renovation or repairs of a home. If homeowners are renovating or repairing something in their home, they may require interim housing until the project is completed. Offering short-term leases can attract this type of resident. 
• Foreign travelers who may require short-term housing. If a resident isn't able to stay in the country longer than 90 days, they will need a temporary arrangement.
• If a resident is only in town for a few months at a time. With more firms offering remote jobs, more individuals are traveling to new places for short periods of time. 

Before renting to short-term renters, work with a property management company to make sure that strategy fits into your long-term income goals. 

Are Short-Term Lease Agreements Right for You?

While flexibility can be a good thing, short-term lease agreements don't work well for every real estate investor. A property manager can help you think through a few critical things before offering shorter lease terms, including:

• Is the renter unwilling to sign a long lease due to job insecurity or other financial concerns that might lead him to default on the rent?
• When current rental property tenants leave, can you be confident of finding another one in a short amount of time to reduce income loss?
• Do you have the time to find a new renter every few months? The time spent in the procedure might mean less time for growing your business. 
• Are you prepared to conduct a make-ready process every few months when a renter moves out? This means cleaning the house, painting the walls, and repairing anything that needs fixing before a new resident can move in.

Property owners must keep high turnover rates and marketing and make-ready costs in mind when considering short-term leases. However, with this type of lease, a property owner can often charge higher rental rates and get out of a bad landlord and tenant situation easier than with long-term agreements. 

Hire a Wilmington Property Management Company To Set Lease Terms

When choosing between a short-term and long-term rental lease agreement, there are many things to consider based on your own situation. Long-term leases are a good option for property owners who wish to earn a consistent stream of income. However, short-term leases can be beneficial if you're looking to sell your property soon or want more flexibility in adjusting the rent price. 

If this all sounds overwhelming and you don't know where to start with developing an agreement that fits your priorities and income goals, work with one of the best property management companies in Boston! CHARLESGATE Property Management helps real estate investors make these types of decisions and create rental lease agreements based on their goals and preferences. Reach out soon to learn more about our residential property management services and how we create and enforce rental agreements!