Short-Term vs Long-Term Leasing

In spite of its technical and administrative nature, signing an apartment lease can be one of the most exhilarating moments within the apartment renting process! After a long search of comparing communities and units, it’s the moment of breathing a big sigh of relief that the search is over. When a new tenant selects a new apartment to rent, they enter into a lease agreement with the landlord, which is a written contract outlining the property rules and terms of the lease (i.e. the monthly rent, other payments, the length of the lease term, etc.). Lease terms are how long the renter promises to remain a tenant of a specific unit before choosing to either renew or move out. Property management companies usually offer a variety of lease term lengths, ranging from one month all the way to two years or even longer. Every renter has a unique set of life events determining what they need to find in a home, meaning that for some a brief stay will help them along their journey, while others are ready to put down roots!

Defining Short-Term Leases

As evidenced by the name alone, short term leases are broadly self-explanatory. The contract is intended to be entered into for a relatively brief duration. Varying circumstances favor choosing a shorter lease, depending on the property’s policies and the renter's needs. Customarily, community managers will refer to a lease as being “short-term” if it is signed for 6 months or shorter. Measured by the technical definition however, the term actually refers to any agreement less than 12 months long. At certain communities, renters have the option to sign for as little as 30 days. Any lease may or may not convert to ‘month-to-month’ status after the original base term of the lease expires. A ‘month-to-month’ lease is where the lease can be terminated by either the renter or landlord by providing proper notice to the other party. While some may consider short-term leases to be less than ideal, month-to-month may be the perfect timeline or provide the amount of flexibility needed by a resident depending on their circumstance.

Freedom and Flexibility

When a tenant’s current situation necessitates flexibility to relocate, the freedom to sign a lease for a small, specified number of months can determine whether a tenant chooses to rent from one community versus another. Case in point, a student transferring to a new city for university may want a more independent and private living situation, and therefore prefer an off-campus apartment over a dorm room. Signing a four- or five- month lease for the semester supports students tremendously, as they know exactly how long they plan to rent and have the freedom to move back home during breaks. In like manner, many jobs require employees to travel frequently, temporarily relocating to new cities, states, or countries. Workers in these situations rely on the ability to sign an agreement with a specific number of months based on the duration of their stay. Short term leases give employees the access to travel for work while maintaining a stable semi-permanent residence. In general, tenants looking for a flexible lease and ever-shifting lifestyle may request a truncated lease, either by preference or necessity. Another instance in which short-term leases may commonly occur is in densely populated cities with high housing demand and a lower supply, such as New York and Los Angeles. More property managers in these cases will be likely to prefer or concede to short-term leases as their interest list fills up quickly. Higher turnover creates more frequent housing opportunities to meet the unceasing demand.

Weighing the Costs

While signing a shorter agreement may be helpful at times, there are a few logistics to consider before finalizing the decision. When a lease expires, community managers may need to update the unit rent prices to keep up with the competitive market. Signing on for a lease that renews frequently could subject a tenant to frequent increases in their rent. Landlords may also charge a higher rent rate for shorter lease agreements, as recurrent turnover can incur high vacancy costs on the property. If a stable, controlled rent rate or consistent household budget is higher priority than relocation flexibility, short term leases may not make the most financial sense. For renters looking for more stability, long term leasing may come out on top as the preferable option.

Defining Long-Term Leases

If a short-term agreement guarantees a brief residence, then it rationally follows that long term leases are fittingly intended for renters who prefer to stay for the “long-term.” A long-term lease provides residents with the ability to come to a commitment with the landlord to rent for a longer period of time than a short-term lease. Typically, the contract will lock in for at least 12 months or for up to 2 years or longer. Property managers commonly cap long-term lease offerings at 13 or 15 months. In many cases, long-term leases are preferable to tenants and managers as they provide mutual stability of rent and income. The longer a tenant lives at a property, the better established the tenant-manager relationship can become. Long term renters also enjoy the added benefit of stable community connection. The longer they reside at a property, the more opportunity they have to get to know their neighbors.

A group of neighbors socialize at a community neighborhood

Socialization and Stability

As we explored in our blog covering the challenges faced by the affordable housing market, housing prices in California continue to rise. Now, renting has essentially become a more viable option for many when contrasted with home ownership, driving individuals and families toward apartment hunting. As many renters wish to enjoy an established living situation, prospects often opt for long-term leasing over short-term options. Any form of apartment leasing automatically allows a renter to have greater flexibility for extenuating life circumstances, but long-term leasing also gives the renter a better opportunity to call their community home for the long hall. In many ways, it can be viewed as the happy median of long-term home ownership and short-term renting. The greater the duration of a residence, the more preventable high turnover becomes. Markets with lower demand therefore enjoy stability not only for the tenant, but for the property management as well.

At the end of the day, short- and long-term leases play key roles in the world of property management and apartment renting. Both have benefits and drawbacks based on the location of the property, the demand of the market, and the needs of the tenant and landlord. At QRM’s Market-Rate apartment homes, prospective residents can speak with the community manager about the lease term lengths currently offered. Our properties offer 3-month to 12-month lease terms, based on availability. Schedule an appointment today at your desired community and speak with the manager about what lease will work best for you!