Whether it is your first investment property, or part of a growing portfolio, determining the length of a Residential Tenancy Agreement should be part of your investment strategy. Consider these advantages of having a longer term tenant:
- Loyal long term tenants are more likely to treat the property with respect
- You avoid the costs of frequently changing tenants
- If you have borrowed heavily to purchase the property the long lease guarantees rental income to ensure you can keep up with mortgage repayments
- If you want the option of increasing the rent during a fixed term agreement of less than 2 years, you may only do so if it is specifically outlined in the Residential Tenancy Agreement. Ensure that you have this stipulated in the agreement to be signed by the tenant. See www.fairtrading.nsw.gov.au for more details on NSW law governing rent increases.
A longer term lease works for landlords who don’t want to sell their property in the near future and if they are confident that the tenant is reliable. Seek advice from your Property Manager to determine the best lease term for your property.