When it comes to renting out all or part of a home, one common question is: what’s the difference between a rental and lease agreement?
Let’s clear that up right away. Both are contracts used by landlords when renting out property but the key difference is that rental contracts are typically short term, whereas leases typically run for terms anywhere between 6 months and 3-5 years.
So which is better? It really depends on the situation. If you are going to rent out your home while you are away on vacation or a business trip, there is no reason to enter into a long-term contract. However, if you are looking for stable income from property you own, a residential lease agreement is a better solution.
The advantages of leases to a landlord are plain to see. First of all, you are renting the property for a known period of time, which largely guarantees that the tenant won’t do a disappearing act and leave you to find a new tenant. You’re also minimizing the risks associated with your property’s downtime and getting a stable income.