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Apartment leases can be a great way to lock in your rent. But not all leases are created equal. While most apartment leases last for one year, there are also short-term leases for as little as one month. A short-term lease may be a good option if you expect to move soon or want to test out a rental without making a long-term commitment. Here's what to know if you're considering a short-term lease.
How Short-Term Leases Work
An apartment lease is a contract between the tenant and landlord specifying the terms of your rental agreement. For example, a lease usually states how much rent you'll pay, when rent is due, the amount of the security deposit and whether the apartment allows pets. Leases typically run for one year or more. Any lease for less than 12 months is considered short-term.
You can find short-term apartment leases for three months, six months, nine months or even month-to-month. Monthly leases generally renew automatically each month as long as you and your landlord both agree. Because landlords must replace short-term tenants more often, which costs time and money, short-term leases typically command higher rent than long-term leases.
To move before your lease is up (either a short-term or long-term lease), you'll have to break the lease. Some leases allow you to break them early if you meet certain conditions, such as paying a termination fee and forfeiting your security deposit. If yours doesn't offer early termination options, you might have to pay rent until your landlord finds a new tenant or your lease term ends, whichever comes first. This can be costly. For example, if you leave one month into a 12-month lease, you risk being on the hook for 11 months' worth of rent.
Your credit report won't show that you broke a lease. However, doing so may affect your credit score if you can't pay what you owe and your landlord sends your account to collections.
When a Short-Term Lease May Be the Right Choice
Short-term leases may be a good idea in the following situations:
- You plan to move soon. A short-term lease can lock in your rent until you relocate.
- You're a student and won't be in the area for a full year. Apartments near colleges often offer nine-month leases to fit the school calendar.
- Your job involves moving from location to location. A short-term lease can be a good alternative to staying in corporate housing or hotels.
- You plan to be a digital nomad and not have a single "home base." Short-term leases let you explore different cities and make the most of your adventurous lifestyle.
- You want to check out a new city before settling there permanently. Whether you plan to buy or rent, it makes sense to "test drive" a town before you commit. According to rental search site Zumper, 19.4% of short-term renters use short-term leases for this purpose.
- You're between homes. Got a new job in a new place? Try a short-term rental while you look for long-term housing. This is the most common use of short-term rentals, Zumper reports.
Pros and Cons of Short-Term Leases
When deciding if a short-term lease is right for you, consider the pros and cons.
Pros of Short-Term Leases
- Flexible move-out options: Instead of waiting a year—or breaking a lease—you're free to move on when the short-term lease is up.
- No long-term commitment: When you're not sure you'll stay in a region, a short-term rental is the perfect solution.
- May be furnished: To streamline tenant turnover, many landlords rent short-term apartments fully furnished, which makes moving in and out a breeze.
- May include utilities: Changing utilities from one renter's name to another isn't always practical with a short-term lease, so landlords often build utility costs into your rent. This can make it easier to budget and decrease some of the paperwork that comes with moving.
Cons of Short-Term Leases
- Higher rents: The convenience of a short-term lease comes at a cost. Rents are often significantly higher than long-term leases.
- Harder to find: Long-term leases are more common than short-term ones. If your heart is set on a short-term rental, you'll have fewer housing options.
- Less stability: Your landlord may not renew your lease, leaving you scrambling for a place to live. Landlords can also change the terms of your lease when it's up for renewal. Depending on state and local laws, this could include raising the rent. Visit your state government website for more information about your state's tenant's rights laws.
- Possible damage to your credit score: When landlords check your credit report and credit score, it appears on your credit report as a hard inquiry. Hard inquiries can cause your credit score to drop temporarily (usually for a few months). Each hard inquiry remains on your credit report for two years. Frequent hard inquiries as you move from one short-term rental to another could negatively affect your credit score.
Pros and Cons of Long-Term Leases
Weigh the pros and cons of long-term leases too.
Pros of Long-Term Leases
- Greater stability: As long as your lease is in effect, you don't have to worry about finding a new place to live.
- Predictable rent: Paying the same rent for 12 months or more makes it easier to budget.
- Lower rent: Long-term leases are usually more affordable than short-term ones.
- Helps you build a rental history: When considering your rental application, landlords may review your rental history report. Renting the same apartment for a year or more helps demonstrate a stable rental history.
- Wider selection of apartments: Long-term leases are more common, so you'll generally have more apartments to choose from than if you were looking for a short-term lease.
Cons of Long-Term Leases
- Less flexibility: A long-term lease locks you into a financial commitment, which may not make sense if you aren't sure you'll stay in the same city long. If you plan to live elsewhere for a month or two, you'll still have to pay your rent while you're gone.
- Costs of breaking a lease: Breaking a lease can cost you your security deposit, termination fee or rent, but there are other costs, too. If you don't pay what you owe, the landlord may turn your account over to collections or sue you to recover the money. Breaking a long-term lease could also hurt your credit score, making it harder to rent an apartment or buy a house later on.
The Bottom Line
Whether you opt for a long- or short-term lease, read it carefully before signing to make sure you understand the agreement. Having good credit can make it easier to qualify for an apartment. Before apartment hunting, check your credit report and credit score to see where you stand. Bringing any late accounts current, paying down credit card debt and not applying for new credit can help improve your credit score—and your odds of landing your dream apartment.
