Pros & Cons: Short-Term Apartment Leases
A short-term lease typically refers to a rental lease that is less than six months. Common short-term leases are three months and month-to-month. More often, you’ll see short-term lease options available in markets and neighborhoods where demand is high and supply is limited, rather than in markets with higher vacancy. With a larger pool of renters than available rental units, landlords in these areas have an easier time handling renter churn and maintaining occupancy. As a general rule-of-thumb, landlords will be more willing to sign a shorter lease in times of rapidly rising rents and will want to lock in longer lease terms in times of flat or declining rents.
Pros of Short-Term Apartment Leases
Some renters prefer shorter-term leases for the sheer flexibility they provide to act on various types of opportunities, whether that be moving for work, family, travel, or a better apartment down the street.
- If you’re a renter who has recently been laid off and is looking for work, a short-term lease can provide added flexibility by allowing you to search for a job that potentially falls outside your “commuting” zone.
- If you need to move for a temporary work assignment in another city, state or country, a short-term lease gives you more mobility.
- If you’ve just moved to a new city and would like to take the time to locate the perfect neighborhood to settle down in, finding an apartment with a short-term lease would give you the chance to really get to know the city while living in it.
Cons of Short-Term Apartment Leases
For renters, there are a few drawbacks associated with short-term apartment leases—and most of those drawbacks will hit you where it hurts: your bank account.
- Typically, property owners charge more for a short-term lease, so you end up paying more in the short term as well as the long term if you continue to renew the short-term lease over an extended time period.
- Property owners are able to raise the monthly rent rate more frequently. Therefore, if a tenant signs a short-term lease and then decides to renew at the end of the lease term, there’s always the possibility of a rent increase for the new lease.
- The property owner is able to change the terms of the lease more frequently, which could have negative implications for the renter.
Why Longer Leases?
Property owners generally prefer longer apartment leases. By signing tenants to a full-year lease, the property owner can rest assured that they won’t have to spend money or time turning the unit. When a tenant moves out of an apartment, the biggest concern for the owner is the potential loss of monthly revenue if they cannot fill the unit quickly. If it takes a few months to find a new tenant, income and cash flow are directly impacted by the vacancy and the higher price of a short-term lease provides some cushion against this risk. Each time a tenant moves out, the property owner has to take the time and money to advertise the unit, as well as get it ready for the next tenant including: cleaning, painting, potentially replacing carpeting and fixing any wear and tear on the unit.
Ultimately, short-term leases are not as cost-effective and much more risky for property owners to offer, which is why you don’t see them as often.