A long term rental is a type of rental that is usually leased out for more than a year to tenants. In some cases, a long term lease is used for a residential property. Some people who want a long term rental don’t mind paying higher monthly rents and prefer the privacy and relative control that comes with renting for a longer period of time. Others prefer the flexibility and convenience of being able to change the terms of the lease at any time. Still others like the idea of leasing out their property for a longer period of time and aren’t concerned about how they will make payments or what they’ll pay for in the end. Still others simply don’t like to be tied down to one long term lease. You can get more information about rent apartment phuket.
Of course, all of these advantages and disadvantages can make taking the long term rentals of a less expensive option than most long term rental strategies. However, the choice of whether to lease for a year or two or for several years comes down to a very simple equation: lower costs or higher profits. If you’re looking for long term rentals, your bottom line will generally be higher if you choose a higher occupancy rate and you may not even need to make any repairs on a property that is below normal occupancy. Conversely, tenants who choose a short term lease or one with an abnormally high occupancy rate may find that they’re spending too much money and are tying themselves to the property for too long.
One benefit of a long-term rental is that you get consistent cash flow. With a short-term lease, you only have to pay a one-time rental fee up front. Over the course of the lease, you pay the ongoing expenses such as security, maintenance, and utilities according to the schedule agreed upon. However, a long term rental strategy allows you to get consistent cash flow because the property is paid for at least a full year (with some properties paying more).
Another advantage of long term rentals is that you can diversify your investment portfolio. The typical rental income strategy offers fixed rates throughout the term of the lease. Long term rentals offer more flexibility because you’re investing in more properties instead of just one. This diversification also allows you to benefit from fluctuations in the market more easily because you’ll have more properties on hand for situations where the market is volatile and you don’t have to keep putting all your eggs in one basket. In addition, most long term rentals come with a considerable amount of long-term credit offered to the tenant; this credit is extended in the form of higher payments over the term of the lease, and it’s almost always returned when the term ends.
There are disadvantages to both strategies, however. Because there’s no capital appreciation involved (since you’re paying the same amount regardless of how much your property is worth) short-term rentals aren’t as financially viable as a long-term rental. Also, because there is less of a buildup of equity in your rental properties, you won’t be able to do anything with them until they’ve finished their lease term, which can take several years or more. This disadvantage is offset somewhat by the fact that short-term rentals often allow you to buy multiple properties at once, allowing you to create an income generating network.
When you rent a property for the long term, you have a chance to build a consistent cash flow. While the income potential isn’t as high as a short-term lease, the possibility to earn consistent cash flow from your rental properties is still present. The biggest obstacle is being able to attract and maintain a consistent cash flow, however. You need to have a plan in place that will help you attract and keep a long term tenant that will cover your other expenses and provide you with a consistent cash flow that you can rely on.