Whether it comes to managing rentals and properties on a full-time basis or having a single property rented out as a supplemental income stream, landlords need to have a full knowledge of all that. Regardless of what the case, many landlords and tenants are confused about what are the differences between a rental agreement and a lease agreement. The terms are often used interchangeably – in order to refer to the same contract, but can also mean two different forms of agreements. Rental agreements as well as leases are agreements which are legally binding in nature. It is important to know about the important differences between a rental and lease agreement, as well as the advantages and disadvantages of the same. Know about some of the pros and cons of lease agreement form and Rental agreement form.
Pros and Cons of Lease Agreement
In case you are looking for stability, a lease can be the best option for you to opt for. A lot of landlords like to opt for leases over rental agreements, given the fact that these are designed for long-term and stable occupancy. When a renter is put in a property for minimum 1 year, a more predictable stream of rental income is possible. It can help reduce the costs of turnover.
However, after signing this kind of an agreement, the rental amount gets fixed and stays so until the agreement comes to an end. In an upcoming region where the values of property are growing consistently, fixed rental cost of a year can indicate that you are missing huge incremental income from a rise in market value. For landlords who are trying to earn a stable income, a lease can be a perfect option. However, it can affect profitability in a negative way – in case there is a growth in the value of property in that span of time.
Pros and Cons of Rental Agreement
Rental agreements have a short term, given that these allow significantly higher level of flexibility as far as rise in rent is concerned. From a technical point of view, with this kind of agreement, the rent might be revised on a monthly basis – to be in line with the present market rent. A California rental agreement is applicable as long as rise in rent abides by local laws as well as the notice provisions regulating the monthly rental.
There are online tools which can be assistive in comparing rental costs in the region. It is essential for renters to know that with such kind of a contract, landlords can raise the rate of rent every month. A rental contract is perfect for a tenant who is unable to commit to a yearly lease period. Deserving renters can look for a temporary rental period in high-demand properties close to big hospitals or college campuses.
Renters who are in search of a long-term lease might be afraid of the indeterminate rental periods or frequent rent increases. Landlords also need to consider the expenses of having tenant turnover more often, which include the costs of cleaning, screening and advertising. In case the rental property is situated in a location having lower rates of occupancy, landlords might have problems in keeping their property rented for long periods. A rental agreement can be perfect for all those landlords who are looking for flexibility, especially in regions with fast turnover of tenants – like college towns.