Long Term Tenant Property Investment Strategy
Never under estimate the value of a long term tenant to your Property investment strategy!
As we have entered summer it is a reminder to all our Property Investors not to underestimate the value of a long term tenant to the cash flow of your investment property. If you have a tenant for an extended period you are saving yourself thousands of dollars over that time including such things as your letting fees, vacancy factor, repairs. Lets look at a scenario the average rent in our market is $400 Per week.
Tenant stays for 1 year each over 5 year period
5 X Letting Fees $2200.00 incl GST
Vacancy Factor (current average 3 weeks) $1200.00
5 X Average repairs to wear and tear at vacancy $1100.00 incl GST
TOTAL COST $4500.00
Tenant stays for 5 years
1 X Letting Fee $440.00 incl GST
Vacancy Factor Zero
Average repairs to wear and tear at vacancy $770.00 incl GST
TOTAL COST $1210.00
Total saving to Property Investor $3730.00
As you can see the savings are considerable, so it is well worth you working with us to ensure your property is well maintained and remains appealing to the tenant especially if you have a good tenant who pays rent on time and maintains your investment property well.
On the flipside however you may need to remember when a long term tenant does leave it is less likely that any minor repairs will be their responsibility as 5 years of normal wear and tear would obviously be different than 1 year of normal wear and tear. It is also quite normal that the rent of a long term tenant is below market rate as many Property Investors see the value in a longer term tenant the above scenario does not take this into consideration.
You still need to take into consideration that investment properties require general maintenance and upgrading – such things as carpets have a limited life span in an investment property, therefore any damage done by a tenant to carpet over that life span will not be claimable through the Tribunal no matter what the circumstances (in our experience the tribunal usually allow 7 years maximum for carpet).
About Jhai Mitchell
Jhai is an award winning Internet Marketing Real Estate Agent for Elders Toongabbie and Kings Langley. After running his own internet marketing business he has now set his own sites for the real estate industry. He observed that 90% of real estate agents did not know how to market themselves online. Jhai is now fixed on one goal. To teach real estate agents that they can market online so much better than they currently are.
Since then he has been consistently quoted in the Sydney Morning Herald and Real Estate Business online. He is a regular guest blogger on TheHomePage.com.au, sharing his expertise of marketing aspects for the Real Estate Industry. His biggest passions are his wife, martial arts, dogs and most of all property.