credit: Claire L. Evans
So what is the difference between a lease and a rental unit? A lease is typically a long term agreement for a specified period of time. A standard lease is for 12 months. This means that you’re guaranteed rent from your tenant during that time, but the rent will stay at the rate you set and you are also expected to keep that tenant unless they break certain terms of the lease.
A rental agreement gives you a little more flexibility as they typically run for a much shorter period of time, a month is quite standard. With a rental agreement your tenant is free to move with proper notice and you’re free to raise the rent or cancel the contract at any time.Both leases and rental agreements have benefits and drawbacks and figuring out which is best for your situation requires a detailed look at your situation. Is it hard for you to find tenants, is there a lot of flux in your area, do you have a history of tenant problems, are you thinking about selling your rental units? All of these considerations and many others must be reviewed. In fact, some landlords prefer a combination of the two with a 12 month lease to begin with and then once the tenant has proven their reliability, a month-to-month rental agreement is signed.