When it comes to leasing housing, the conventional wisdom is the longer, the better. The main reason for this is cost. You can always save money by extending the lease terms as long as possible. The agency will probably throw in extras like a free month and garage for no extra charge. Leasing companies can afford to be generous because it actually costs money to turn over a dwelling from one person to another. They try to make up the cost by raising the rent on the next person, these are all pieces to the puzzle that make up the basics of real estate for commercial and residential.
While these savings look good on paper, they might not actually be a good deal depending on the type of person you are. There are also costs associated with accepting a long lease. Those costs are not always immediately apparent and might not easily translate to dollars and cents. Society places a lot of pressure on a person to buy a house and become a permanent part of the community while building long-term wealth in the process, in fact many people end up looking into how to become a real estate agent once they purchased their own first home and enjoyed the process. You also get better credit consideration when you are a married homeowner than a single or married renter. Almost all loan applications want to know if you rent or own. There is a definite bias for ownership and long-term leasing. Here is the other side of the story:
See More, Do More
Not everyone is cut out for settling down in one place and doing one thing for long periods of time. If you are one of those people, there are not enough financial benefits in the world that can coerce you into taking out a long lease. The only reason you would do such a thing is that you have no choice.
That was the past. Now, you do have a choice to do monthly rentals that won't punish you for not taking out a two-year lease in the form of confiscatory rates. You don't have to break a lease to be on your way with no strings attached. This is perfect for those who have a mobile lifestyle due to work. You don't have to be in a circus to have to go from town to town following work. You might be a project manager who deals with store openings. You are in a place for a few months until the job is done before picking up and moving on to the next. Now, there are rental options that finally recognize the valuable contributions people like you make to society. You might also be a writer, photographer, or some other form of digital nomad who needs to always pack light and be ready for what's around the next corner.
Too Much Uncertainty
Some people live on the knife's edge. Their work situation is precarious. Perhaps they are in sales where it is either feast or famine. When the money dries up, there might not be enough to continue at the rate you are currently paying. By going month to month, you can always leave for some place less expensive until it is time to feast again.
For others, it could be health. You might have to bo back home to take care of an aging parent. You might have health issues that could explode on you at any moment. The point is that you can't be certain what is going to happen next because for whatever reason, you are one of those people who lives in a constant state of uncertainty about the next two days, not to mention the next two years.
Opportunity Cost
If you are in business, you don't need a primer on opportunity cost. Whenever you tie up your resources in one opportunity, they cannot help you with other opportunities you didn't foresee. This is the danger of signing a long-term lease. You are committed to that place, that community, that job. When the boss rings to tell you that you finally have a shot at that promotion you have been after, but you have to pick up and move to the location 1,000 miles away, you have to be able to take it and run with it. What you lose in opportunity cost often far exceeds what you gain with long-term leasing perks.
Don't get me wrong: There is nothing wrong with settling in for the long haul. Just consider alternatives more suited for seeing and doing more, working with the turbulent waters of uncertainty, and the freedom to pounce on opportunity when it is within your grasp.
