With low vacancy rates across major metropolitan areas, a lot of investors are asking what is best, a short term lease or long term lease?
Here are a few things to think about when considering what to do…
• Rental Demand for your Area: In general, if demand is high for rental property in your area, you should consider shorter term leases. If considering a long term lease such as 3 to 5 years, build in rental increases.
• Planning on selling soon? If you are selling soon, a tenant may make it harder to sell. Most of the time, having a tenant can cause access issues, as well as negatively affect the presentation of the property. Also, buyers wanting to move in straight away can be turned off. If you are planning to sell your property, consider a shorter term lease.
• Changeover costs: Short term leases can have higher changeover costs. They include re-letting fees, cutting keys, changing locks, lease preparation, lodging a bond, condition reports, advertising costs. Also, a lot of wear and tear occurs during tenants moving in and out, and we usually experience new tenants requesting more maintenance than existing tenants, so a longer lease becomes more favourable over time.
So it all depends on your circumstances and your investment strategy. Keep in mind that during this tight rental market, tenants prefer longer leases to provide them with certainty and security.
Want to talk strategy? Call Plan Assist on 02 9449 2333. We have a team of property professionals ready to help you with your investment decisions.