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What Counts as a Short-Term Lease Agreement?

Short-Term or Long-Term Lease Agreement? Finding the Right Lease Strategy

Deciding between a long-term and short-term lease agreement is one of the most important choices a landlord can make. Each option comes with its own benefits, challenges, and management requirements. Making the right choice can impact your rental income, how much hands-on work you will need to do, and the overall experience of managing your property.

With so many Americans renting homes today, you are likely to encounter tenants who request shorter stays. Short-term leases can offer higher returns but often require more effort, while long-term leases provide stability with less day-to-day management.

This guide walks you through the key differences between short- and long-term leases, including pros and cons, practical tips, and factors to help you choose the right strategy for your property.

What Counts as a Short-Term Lease

A short-term lease usually refers to any rental agreement lasting less than six months. Common formats include month-to-month rentals, seasonal housing, or temporary furnished apartments. Long-term leases typically last six months to a year or more and offer a steady income with a lower turnover.

Tenants may choose short-term leases for a variety of reasons. Some need temporary housing for a work assignment or internship, others are waiting for a new home to become available, and some are on vacation or exploring a new city before committing to a permanent move. Landlords may also use short-term leases if they plan to sell or renovate a property or want more flexibility in managing their units.

Advantages and Drawbacks of Short-Term Leases

Advantages of a short-term lease include the ability to charge higher rental rates, flexibility to adjust terms, reclaim the property quickly, and opportunities to maximize seasonal demand. Short-term leases also allow landlords more frequent access to their property, which can be useful for maintenance or inspections.

Drawbacks of short-term leases include more frequent turnover, which means more cleaning, inspections, and tenant communication. Income can be less stable than with long-term leases. Some cities have strict regulations on short-term rentals, including licensing, zoning, and tax rules. Tenant screening is critical because short-term renters can still cause property damage or payment issues. Online services like AAOA can make this process quick and dependable.

Pros and Cons of Long-Term Leases

Long-term leases provide stable, predictable income for six months, a year, or more. Tenants stay longer, which reduces turnover and the need for frequent advertising, screening, and property maintenance. This makes it easier to budget for expenses and plan property upkeep.

The main disadvantages of long-term leases are less flexibility to adjust rent mid-lease and slower ability to reclaim the property for personal use, renovations, or a sale. Long-term leases may also limit the opportunity to earn higher short-term income during peak demand periods.

Comparing Short-Term and Long-Term Leases

Feature	Short-Term Lease Agreement	Long-Term Lease Agreement
Typical Length	Less than 6 months	6 months to 1+ years
Income Potential	Higher per night/month	Steady, predictable
Workload	Frequent turnover, more management	Lower turnover, less frequent work
Flexibility	Easy to adjust terms or reclaim unit	Limited until lease renewal
Risk	Vacancies, scams, regulatory issues	Tenant disputes, slower rent changes

Key Considerations for Landlords

Screen all tenants, even for short-term stays. Tools like AAOA help verify identity, check eviction and criminal history, and assess financial stability.
Stay informed about local laws. Regulations for short-term rentals vary by city and neighborhood, and some areas have licensing, zoning, and tax requirements.
Stay organized to handle communication, maintenance, and tenant issues efficiently.
Plan for additional expenses, such as utilities, cleaning, or landscaping, which may fall on the landlord for short-term rentals.

When to Choose Short-Term or Long-Term Leases

Short-term leases are best if you want higher income and are comfortable with more hands-on management or hiring a property manager. They work well in areas with high demand from temporary residents or tourists and where local laws allow short-term rentals.

Long-term leases are best if you want steady, predictable income and prefer a more passive approach. They are suitable for areas without much short-term rental demand and for landlords who want to reduce frequent advertising, screening, and cleaning.

You do not always have to choose one approach exclusively. Some landlords offer short-term extensions at the end of a long-term lease, which can be beneficial for tenants who need a few extra months while keeping the property occupied.

Key Takeaways

Short-term leases can provide higher returns but require more effort, organization, and risk management. Long-term leases provide stability and less frequent management but may limit flexibility and earning potential.

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Whatever type of lease you choose, preparation is key. Understand local regulations, stay organized, and screen every tenant to protect your property and maximize your rental income.

With careful planning and the right approach, both short-term and long-term leases can help you build a successful and profitable rental business.

How AAOA Can Help

If you need assistance with tenant screening or have questions about the rental process, consider reaching out to professionals who specialize in this area. AAOA offers a variety of services to landlords and property managers, including insurance, rent reporting, rent collection and financing.

Disclaimer: All content provided here-in is subject to AAOA’s Terms of Use. Nothing contained on this website constitutes tax, legal, insurance or investment advice, nor does it constitute a solicitation or an offer to buy or sell any security or other financial instrument. AAOA recommends you consult with a financial advisor, tax specialist, attorney or other specialist who is able to properly advise you.