When it comes to renting out a property, landlords have the option to offer either a long-term lease or a short-term, month-to-month rental agreement.

A long-term lease is generally considered a year or longer, while a short-term lease can be month-to-month or up to six months, although the exact time can vary depending on the property.

Each leasing option has its own set of advantages and disadvantages. So what are the pros and cons of offering a short-term or month-to-month rental agreement?

Pros of Offering a Short-Term or Month-to-Month Rental Agreement

One of the biggest advantages of a short-term or month-to-month rental agreement is the flexibility it offers the landlord, as they can adjust rental terms or negotiate rent increases more frequently with each new tenant.

It’s also generally easier to terminate a lease with a short-term rental. This can benefit landlords who want to regain possession of the property for personal use or put it on the market. Short-term leases can also make it easier to end your relationship with tenants who may be causing issues at the property.

Another pro to month-to-month leases is that these rentals often offer the potential for higher rental income, as tenants will pay more for the flexibility and convenience of a shorter lease. Landlords can adjust rental rates according to market conditions or seasonal demand, generating more revenue than with a fixed, long-term lease.

And finally, landlords who offer shorter leases have access to a pool of renters looking for flexible leasing options that long-term rentals don’t provide. This means property owners can target potential tenants that a large segment of the rental market misses.

Cons of Offering a Short-Term or Month-to-Month Lease

Although there are certainly benefits to offering a short-term lease, there are also cons.

For example, short-term rental agreements generally have higher tenant turnover. This means landlords may experience more frequent vacancies than with a long-term lease, which can be financially challenging, especially during periods of low demand or off-peak seasons. Constantly searching for new tenants can also be time-consuming.

Short-term rental agreements also offer less stability for landlords. Property owners may face uncertainties regarding occupancy rates and constant turnover, while tenants are faced with the possibility of having to find a new place to live more frequently, which can be less appealing to prospective renters.

In addition, managing multiple short-term tenants requires more administrative work, including more frequent lease negotiations, renewals, and background checks. This can be time-consuming and costly unless you work with a property manager experienced in managing short-term rental units.

Income from the property can also be less predictable with month-to-month leases. Landlords may experience fluctuations in cash flow due to seasonal variations, market conditions, or unforeseen circumstances, making it imperative to have enough saved to cover expenses during vacancies.

Not Sure Which Leasing Option Is Best for Your Property?

Ultimately, determining whether to offer a short-term or month-to-month rental agreement depends on several factors. By carefully weighing the pros and cons of both options, you can decide which rental agreement structure aligns best with your property and goals. Not sure which leasing option is right for you? Ask a professional by contacting FAS Management at (202) 337-5080 today!