A recent study found that individuals own 41% of rental properties. If you're a first-time landlord, you may have questions regarding rental leasing agreements. Sadly, many first-time landlords choose the wrong agreement for their property goals.
To help you avoid this mistake, we've found everything you need to know about the different types of leasing agreements. That way, you can choose an agreement that aligns with your needs and situation.
Here's a quick look at the common types of rental agreements:
Month-to-Month Agreement
A month-to-month agreement is exactly what it sounds like; it's a lease that lasts 30 days. While the timeframe is short, this lease agreement does come with a few unique advantages.
For instance, as long as proper notice is given, you can raise the rental price and even change components of the rental agreement. It also means with proper notice, you can revoke the lease when you want.
A month-to-month lease agreement ensures that you are not tied to a fixed agreement. It's a great solution for short-term rentals since it allows you to change the agreement to what best suits you and your tenants' needs.
However, keep in mind that the added flexibility goes both ways. Tenants can end their leases monthly, leaving you to constantly find new tenants or take on the vacancy loss. Month-to-month agreements are risky, but when used correctly, they can effectively earn money.
Fixed-Term Lease Agreement
Fixed-term leases are the standard leasing agreement. They're called fixed-term leases because both the landlord and tenant agree to comply with the terms of the lease for a fixed amount of time.
Generally, these agreements last anywhere from 12 to 16 months, and in that time, neither the landlord nor the tenant can end the agreement unless they have just cause.
Unlike the month-to-month agreement, a fixed-term lease provides both the landlord and tenant with stability and security. As the landlord, you'll receive a set amount each month and won't have to worry about finding new tenants each month. This security ensures that you'll have a consistent business, enabling you to make a steady stream of income for the allotted time.
Rent-to-Own Rental Agreement
A rent-to-own agreement is a common but unique leasing agreement. This agreement allows the tenant to buy the property after it's been rented for a period of time.
There are two types of rent-to-own agreements. The most common is a lease-option agreement, which gives the tenant the option of buying the property after the rental lease is up. However, a lease-purchase agreement requires the tenant to buy the property after the initial lease ends.
If you want to sell your property, then this agreement is perfect. You'll not only be generating a fixed income each month, but you'll also have a potential buyer already lined up.
Choose a Rental Leasing Agreement Today
Rental leases are not one size fits all; that's why it's crucial to pick a rental leasing agreement that fits your needs and goals for your property. Here at Wolf Nest, we take pride in helping our Salt Lake City neighbors manage their property. Whether it's single or multi-family homes, our team can help you with any property management situation.
For more information about property management, contact us today.
