Renting your home: Long-term versus short-term leases

Date: 20 August 2014
Renting your home: Long-term versus short-term leases
Whether it's a holiday home on the coast or an inner-city apartment in a state capital, one issue you'll need to figure out as the owner of an investment property is whether to use long-term or short-term leases when renting out your home.

Short-term

Rental properties that feature short-term leases are typically popular in areas with high transient populations. For instance, when a family is taking a holiday, their only options are essentially hotels or rental properties.

A fully furnished property with a short-term lease can provide you with steady cash flow if it's located in a popular area during a busy time of season.

Even longer leases that are still on the short side, such as those that last three months, can provide you with benefits.

As many landlords have found, sometimes having the wrong tenant can be more trouble than it's worth. With short-term leases, you don't necessarily have to worry about being stuck with a troublesome renter.

Long-term

What long-term leases may lack in higher rental yield capability, they can more than make up for in security and steady income.

As the owner of an investment property, the longer your home sits empty, the more money you're losing out on. And since you'll likely be paying off a loan for the property, this can quickly interfere with your finances.

Long-term leases will practically guarantee that your property is bringing in money for a significant amount of time.

Additionally, if you find yourself with a high-quality tenant - one who always pays rent on time and takes care of the property - chances are you'll want to hang on to him or her for as long as possible.

In the end, deciding between the two options comes down to the type of property you own, where it's located and what type of investment you're hoping to make.
Back to articles Filed under: Media / National News Tags: investing, investment property, landlords, lease period, long term lease, short term lease, tips for landlords
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