Short-term leases enable the lessor to affect frequent rent changes. The result is short-term leases are a benefit to the lessor in a market with increasing rental rates and a detriment in a market with decreasing rental rates. Long-term leases secure the rental rate for an extended period of time. The result is long-term leases are a benefit to the lessor in a market with decreasing rental rates and a detriment in a market with increasing rental rates. That said, what is the right lease for the lessor – short-term or long-term?

NetGain’s lease recommendations are based on the intrinsic characteristics of income property. Those characteristics dictate that a lessor should not negotiate a lease based on estimates or predictions of the future. The lessor should use current rental market information as the basis for negotiating the price and terms of a lease. The goal of the lessor should be to achieve the longest term possible. Those negotiations should also include all of the financial benefits (including annual increases) that are necessary for the lessor to achieve a reasonable ROI and one that the lessee can afford.