Resi - Multi year leases
- Thread starter Trogdor
- Start date
Absolutely
I have recently signed up an existing tenant on a renewed 28 month lease, The previous lease was 16 months. Where possible I prefer longer term leases for my IPs.
This particular lease has rental increase after 14 months at pre-agreed amount.
The property is self managed and the longer leases suit both the tenant and myself. I think if you can meet the needs of the tenant you will have less problems. BTW, this tenant keeps the property immaculate and I never have any complaints or issues to deal with.
It is probably not very common for properties with a PM as they will usually suggest 6 or 12 month terms especially if new tenant. Theoretically, they will suggest they can control market rent and the like with shorter terms, however, I find the costs of reletting, renewals and vacancies in between tenants to be a PITA.
It remains my preference to have longer leases on all my Ips as long as there is provision for rental increases.
I have recently signed up an existing tenant on a renewed 28 month lease, The previous lease was 16 months. Where possible I prefer longer term leases for my IPs.
This particular lease has rental increase after 14 months at pre-agreed amount.
The property is self managed and the longer leases suit both the tenant and myself. I think if you can meet the needs of the tenant you will have less problems. BTW, this tenant keeps the property immaculate and I never have any complaints or issues to deal with.
It is probably not very common for properties with a PM as they will usually suggest 6 or 12 month terms especially if new tenant. Theoretically, they will suggest they can control market rent and the like with shorter terms, however, I find the costs of reletting, renewals and vacancies in between tenants to be a PITA.
It remains my preference to have longer leases on all my Ips as long as there is provision for rental increases.
We've signed multi-year leases.
2 years lease with yearly increments. This is in Moranbah QLD. The tenant has security of accomodation and we have a vacancy free rental.
A win-win.
P.S: The only downside is you maybe locking in the rent at a lower price when the market would infact be enjoying a Higher rent.
2 years lease with yearly increments. This is in Moranbah QLD. The tenant has security of accomodation and we have a vacancy free rental.
A win-win.
P.S: The only downside is you maybe locking in the rent at a lower price when the market would infact be enjoying a Higher rent.
Not sure why you would do this, as to me it favours the tenant, not the landlord...
Under the act tenants can still break a lease at anytime and as the landlord you can't unreasonably withhold this request... I believe, so what's the point?
The tenant just has to pay your re-leasing costs if they break mid-way.
Under the act tenants can still break a lease at anytime and as the landlord you can't unreasonably withhold this request... I believe, so what's the point?
The tenant just has to pay your re-leasing costs if they break mid-way.
Just like a 6 mth lease, right ?
I just leased out a place for 2 years. In Karratha 6yr+ leases are not unheard of. there is a kicker tho - you must adjust the rent annually to market NOT cpi. a mate leased out a place in karrtaha for 7 years adjusted to CPI at $650 a week. with neighbouring properties now $2000 a week he lost a lot of money thru a silly mistake
i believe Dazz did just recently...?
Thanks all.
Am asking from the perspective of renting on a multi yr lease myself rather than buying a bigger and better PPOR.
Would rather buy more CIPs and shares rather than a bigger Melbourne PPOR at this point in time, so if we can get security on a Multi year lease then can rent out current PPOR and rent something nicer.
Am asking from the perspective of renting on a multi yr lease myself rather than buying a bigger and better PPOR.
Would rather buy more CIPs and shares rather than a bigger Melbourne PPOR at this point in time, so if we can get security on a Multi year lease then can rent out current PPOR and rent something nicer.
For what it's worth, you can't "not permit" a lease break. Or at least not here.
I don't really see the problems of lease breaks - yes they're not ideal, but your re-letting fee, advertising and rent is still paid up until the date someone else moves in.
Anyway, back to the original poster.
You can negotiate a longer lease period, although personally I would always recommend starting a tenant on a 6-12 month lease before locking them in for 3+ years. That way you can up the rent to market after the 6-12 months and you also know what the tenant is like paying the rent and how they keep the property. Most leases with a longer term will have an in built increase, this usually ranges between $5-$20pw.
I don't really see the problems of lease breaks - yes they're not ideal, but your re-letting fee, advertising and rent is still paid up until the date someone else moves in.
Anyway, back to the original poster.
You can negotiate a longer lease period, although personally I would always recommend starting a tenant on a 6-12 month lease before locking them in for 3+ years. That way you can up the rent to market after the 6-12 months and you also know what the tenant is like paying the rent and how they keep the property. Most leases with a longer term will have an in built increase, this usually ranges between $5-$20pw.
What more would you want form the tennant than your actual costs?
Punitive damages?
Perhaps a few months of community service?
With all contract breaches the party in breach is not liable for more than the other parties costs. Even if the damages are liquidated they still have to reflect the likely costs of the breach in the pre-estimation.
Lessons learnt from another field of endeavour
We had one residential Tenant who moved into our previous PPoR back in April 2004.
She was on fixed 2 yr Leases, behaved herself well, paid the rent on time and kept the place in good nick, even doing some reno work both in the house and in the garden.
We were happy with her and she was happy with us and the house.....yes, yes, shock horror.
In Jan 2010, she approached us for another 2 year Lease, and I said "look, these things come around too often, and I'm too busy with other things to muck around. You've been here for nearly 6 years, if you wish to stay, why not sign up for a longer Lease so we can both forget about this nonsense for a good while."
Signed her up for 5 years with 6% pa fixed rental increases on the anniversary as it ticked thru.
Good for me, cashflow is steady, Banks like it, low on paperwork, no agents involved, I know I don't have to search thru the grots on offer to replace her.
Good for her - security of Tenure if she wants it. It is daunting for private folks though not used to business forecasting and thinking too far out into the future. She quickly realised when signing that her eldest would be finished high school and probably living elsewhere and her crawling baby would be in primary school. You could see her whole life flashing before her eyes as she took it all in.
Anyway, she's 13 months into the 60 month term and all going swimmingly.
I'm ashamed to say, that a couple of years ago, I splurged out and sent a hamper to their door a few days before Xmas 08....perhaps that had something to do with the good relations. It went against every contractual bone in my body, but I have to admit, graft and corruption seems to pay off.
We had one residential Tenant who moved into our previous PPoR back in April 2004.
She was on fixed 2 yr Leases, behaved herself well, paid the rent on time and kept the place in good nick, even doing some reno work both in the house and in the garden.
We were happy with her and she was happy with us and the house.....yes, yes, shock horror.
In Jan 2010, she approached us for another 2 year Lease, and I said "look, these things come around too often, and I'm too busy with other things to muck around. You've been here for nearly 6 years, if you wish to stay, why not sign up for a longer Lease so we can both forget about this nonsense for a good while."
Signed her up for 5 years with 6% pa fixed rental increases on the anniversary as it ticked thru.
Good for me, cashflow is steady, Banks like it, low on paperwork, no agents involved, I know I don't have to search thru the grots on offer to replace her.
Good for her - security of Tenure if she wants it. It is daunting for private folks though not used to business forecasting and thinking too far out into the future. She quickly realised when signing that her eldest would be finished high school and probably living elsewhere and her crawling baby would be in primary school. You could see her whole life flashing before her eyes as she took it all in.
Anyway, she's 13 months into the 60 month term and all going swimmingly.
I'm ashamed to say, that a couple of years ago, I splurged out and sent a hamper to their door a few days before Xmas 08....perhaps that had something to do with the good relations. It went against every contractual bone in my body, but I have to admit, graft and corruption seems to pay off.
In Victoria, the Residential Tenancy Act covers leases from 13 weeks to 5 years.
This is so that tenancies - holiday rentals or other short term accommodation, are outside the Act, as are leases of 5 years or more
We have had the occasional 2 year lease. Tenancies in Victoria have an average life span of 23 months and although our longest tenancy ran for more than 5 years the tenant was sometimes on a lease, sometimes not, sometimes on a 12 month lease and sometimes on a 6 month lease.
When we have rented over the years it has usually been while building somewhere else, so 12 months has been sufficient
Trogdor, you are looking to use 'Other People's Money' as part of an investment strategy. This is no different to people renting in particular school zones
Whatever works for you sounds like a good idea!
Cheers
Kristine
This is so that tenancies - holiday rentals or other short term accommodation, are outside the Act, as are leases of 5 years or more
We have had the occasional 2 year lease. Tenancies in Victoria have an average life span of 23 months and although our longest tenancy ran for more than 5 years the tenant was sometimes on a lease, sometimes not, sometimes on a 12 month lease and sometimes on a 6 month lease.
When we have rented over the years it has usually been while building somewhere else, so 12 months has been sufficient
Trogdor, you are looking to use 'Other People's Money' as part of an investment strategy. This is no different to people renting in particular school zones
Whatever works for you sounds like a good idea!
Cheers
Kristine
Hi Ausprop,
For the uneducated (me
) do you mind explaining what the above means? Are you saying your friend didn't look at market rental rates in Karratha and only put his rent up according to the CPI or was there something in the rental contract that stopped him increasing further?Hi Ausprop,
For the uneducated (me
Exactly - the lease stipulates how much you can increase by - CPI or by market review. in this case some fool (an agent) put in CPI, then rents proceeded to triple
Ha! I knew it! I knew there was a big softy in there, you big grizzly (teddy) bear!
