Despite the difficult year just gone, and the likelihood that it will be some months before things will return to relative normality, property investment across the country is still sound, although there are some variations depending on location. As a society and an economy, however, we have learnt the hard way that we should always be prepared for the unexpected and we should always have a Plan B, just in case.
Short-term vs. Long-term Tenancies
Investors in the residential property market have generally had a steady cash flow as the demand for rental accommodation has been strong over time. They have not usually been forced to choose between short and long-term tenancies as both options have been available. However, the times are changing.
Flexibility a Key Benefit
There are some advantages to short-term tenancies for owners. Flexibility is a key benefit as the property can be used by friends and family for short periods between tenancies, bad tenants can be moved on quickly, and if a lucrative long-term opportunity comes along, the owner can move back to a long-term arrangement.
Higher Rental Returns; Less Wear and Tear
Short term rentals often attract higher rental returns, especially in competitive locations, and there is less wear and tear as the properties are inspected, cleaned and repaired after the end of each tenancy. Not being locked into a long-term tenancy also gives the owners the flexibility to sell the property if circumstances require it.
Our professional property management team here at Bunbury Real Estate work hard to ensure that our property owners maximise their rental returns, regardless of whether they are short- or long-term rentals. Every property is given the same care and attention and all tenant references are thoroughly checked.
Long-Term Rental Income Security in Uncertain Times
In these new and uncertain times, however, for some investors none of these benefits are as important as security. Many owners are relying on the rental returns to pay the mortgage on their investment properties. They prefer the stability of long-term lease agreements with a set date. This allows them to plan their cash flow as the rental income comes in at a constant rate. They also are not vulnerable to off-season variables that may see their properties vacant for weeks at a time.
Fewer Costs, Simpler Management Arrangements
In addition, owners have fewer costs over the term of the lease as long-term tenants usually pay for utilities. They are also not advertising their properties every few weeks or months, nor are they refurbishing or paying clean-up costs as often as short-term rental owners. Long-term owners are also not interacting regularly with their property managers so for them, the management of their investment is simple and stress free.