Lease or Rental Agreement?

I often receive information requests for advise on how to handle landlord-tenant matters.  Well, here’s an article recently published in a newsletter I receive online from www.completelanlord.com.  Although short and that I have not used their services, I felt that the information was relevant and good. 

The only thing I changed are the hyperlinks which go to Wikipedia for a definition instead of to ordering the particular form online at their website.  Of course, you can click the above link and purchase the forms from them.

You may also view the entire Florida Statute HERE or information from the Division of Consumer Services HERE.  From the Federal Trade Commission, read Using Consumer Reports: What Landlords Need to Know

So, without further adue….here it is.

By Bill Lederer
Fellow Landlord and Founder of
CompleteLandlord.com

When renting out your property, one of the first decisions you must make is whether you will be asking your future tenants to sign a lease or a rental agreement.

A lease establishes tenancy for a consecutive number of months, usually one year. A rental agreementis on a month to month basis. It is assumed that the agreement will continue each month unless you or your tenant gives 30 days notice that the agreement will not continue. So, which agreement is right for your property?

Many landlords prefer the flexibility of month-to-month arrangements, especially in two cases. The first, is renting in markets with ample renters and rising rents. The second, is renting when the building or unit is up for sale. In such cases, you will have the flexibility to raise rent on a month-to- month basis rather than yearly. Also, you will be able to have income during the unpredictable period of time during which the building is for sale.

The downside of month-to-month agreements is the increase in tenant turnover because of the elasticity the arrangement creates.

If you’ve had trouble finding tenants for your property and rent is stable in your area, a lease is your best option. You will be able to raise rent less often, but in a market where rents aren’t quickly rising this is the already the norm. A lease guarantees cash flow for numerous months and reduces tenant turnover. The downside to this is the possibility of a bad tenant, who is harder to remove than in a month-to-month agreement, so be sure to sreen carefully.
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See other relevant articles such as Tax Planning for Landlords HERE.