A long term rental agreement is a rental arrangement in which a person rents a property for a long duration of time, usually more than a year. In addition, depending upon the owner, the rental agreement may come without any furniture or furnishings at all. This can be advantageous to the landlords since they do not have to invest in buying furnishings, and they can instead let their tenants live in these houses as if they were their own. Usually, a long term rental agreement is a great option for people who are not able to buy their own homes. Not only will this save them from the cost of house maintenance, but also it can help them save on their tax returns.
However, before you go ahead with a long term rental strategy, it is important that you understand all the pros and cons associated with such an investment property. The first advantage that you can get from renting an investment property for a long time period is that of flexibility. Since you would not be committing yourself to a particular lease term, you can always choose to go away for a vacation every now and then, or even relocate to a new city or state.
Another great advantage that you can get from such long term rentals is the investment return. This comes mainly from the lack of immediate costs that you will have to incur when you are not living in your rental strategy. For example, you will not need to worry about paying any utilities or maintenance fees, or repairing the carpets or the wall. All these expenses will be handled by the tenants who are living in the house, and you can be assured of a much higher occupancy rate because of it. Since most investors like to see at least a 3% occupancy rate, this can translate to a huge amount of extra profits for you. You can get more information about rent apartment phuket.
The lack of an immediate expense also translates to lower fixed costs for your business. For example, you will not have to invest in expensive equipment or utilities because all of these expenses will be handled by the tenants. Thus, you can focus on getting better returns, all while enjoying all the advantages of having a long term rental strategy. In some cases, short term rentals can be quite beneficial especially if you plan to expand your business into the nearby areas.
You can also expect your long term rental income to increase over a period of three years because of the increased number of tenants. On average, the longer-term tenants will pay a significantly lower monthly fee than the short term ones. This is due to the fact that the longer-term tenants will occupy the house longer, and since they will be paying lower rents, you can be assured of consistently higher monthly cash flows. You can therefore be sure that the rental income will continue to grow over a period of three years, even as your business grows.
All in all, term rentals offer great advantages to both the short term and long term property owner. Aside from being able to increase your income over a fairly short period of time by leasing out your property, you are also guaranteed to receive regular payments every month. With this, you can be sure that the rental fees you pay will cover all your other expenses as well.