Renting your property on a short term lease. One popular benefit of investing in property is the control and flexibility of owning the asset. There are many types of rental agreements available and they are suited to different investors.
Some investors may want a short-term or long-term lease, depending on their circumstances and objectives. In this article we highlight some points to consider when renting your investment property on a short term lease.
A short term lease can be a useful income stream that provides some flexibility. You may want to lease your property while you are away on an extended holiday or you may be working overseas for a while. The extra income may be helpful in paying your mortgage or add to your savings.
If your intention is to rent it longer, but on short term leases to capitalise on high yields it does face some potential problems, most notably the risk of encountering a period of vacancy. If the lease expires without renewal or a tenant replacement you may experience no income stream. In comparison to a long-term lease agreement, if you’ve sourced a good reliable tenant, the income will be consistent and the property potentially well looked after.
During peak rental periods a short-term lease can charge a premium rate with a lower risk of incurring a vacancy, but a landlord needs to be aware of the property market trends to make this work favourably.
If the investment property is located near a beach you may also want to occupy the home during certain times of the year. If you leased it long-term you lose the flexibility of being able to enjoy the property during the warmer seasons. It’s not uncommon to want a holiday home and earn some income from it when you aren’t living there.
When looking to lease short term you’ll potentially have the home furnished. The income may increase with this included, but you need to make sure the tenant respects you personal contents.
Short term leases can also be very time consuming. It is likely to need regular clean in preparation of the next lease, while the furniture may need additional maintenance costs.
When assessing the right lease to meet your investment needs, take note of the risk and reward. Discuss your objectives and time frames with your property manager so they advertise appropriately and source a suitable tenant to meet those goals.
Renting your property short-term can be a rewarding experience, but it can also be a costly and time consuming outcome. Do your home work, obtain advice and proceed with caution. The property market landscape changes regularly. A long term approach is often the best means to mitigate risks and provide consistency.
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While we have taken care to ensure the information above is true and correct at the time of publication, changes in circumstances and legislation after the displayed date may impact the accuracy of this article. If you want to learn more please contact us. We welcome the opportunity to assist you.
June 2020
