Rental Agreement vs. Lease

[Danielle J.]

Hi BP! I'm purchasing my first multifamily property located in Redlands, CA. The property is nicely located near a university and the area generates a pretty decent selection of tenants. I've been reading about the pros and cons of having a rental agreement vs. a lease and I'm having difficulty determining which I prefer to use for tenants. I like the flexibility of having a rental agreement so that I can increase rents or modify the language of the agreement as needed. I also like the security provided by the lease option in reducing vacancy rates. However I believe that a tenant will leave when they want regardless of the consequence of breaking a contract.  With such a large pool of renter in the area, filling vacancies shouldn't be a problem, so I' m  leaning more towards rental agreements...what do you guys think? Which one works best in your business?

Also if anyone has suggestions for a solid rental agreement or lease form that adheres to CA law, please share. 

[Curtis Bidwell]

@Danielle J. We use a "hybrid" and tenants tell me they really like it.  It is technically a month-to-month rental agreement but it encourages longevity by prorating the return of the security deposit.  A lease protects the tenant as much or more than you.  If I have a problem with a tenant (or their children) that does not violate the lease I can still give a 20 day no-cause notice of termination (Wa State).  

Practically, people have treated it as a lease and don't generally leave until after at least a year, when their deposit become fully refundable.