6 Month Lease

Discussion in 'Property Management' started by Ian87, 31st Oct, 2017.

Join Australia's most dynamic and respected property investment community
  1. Ian87

    Ian87 Well-Known Member

    Joined:
    23rd Sep, 2016
    Posts:
    198
    Location:
    Melbourne
    Hey guys, we recently purchased a place in Geelong our initial thought was purely to use it as an investment property, however we have been thinking of moving there for a year or two as we are entitled to the Vic stamp duty concession which would save us 24k. We are not quite ready to move yet due to work commitments etc, commuting would just be hellish. The requirements for the stamp duty concession is that we must move in within the first 12 months. So we are thinking of tenanting it for 6 months before moving in ourselves. This would give us time to get everything in order and look for new jobs closer the our new place.

    How many of you have had contracts this short and have the tenants generally been good when you have moved them on in such a short period of time?

    Cheers.
     
  2. DaveM

    DaveM Adelaide Buyers Agent & KFC Strategist Business Member

    Joined:
    14th Jun, 2015
    Posts:
    3,756
    Location:
    Adelaide & Sydney
    6-10 months can be good for someone who has sold and is waiting for a build to complete, someone moving for a contract job, or similar. May reduce tenant pool from long term renters but wont exclude everyone
     
  3. D.T.

    D.T. Specialist Property Manager Business Member

    Joined:
    3rd Jun, 2015
    Posts:
    8,921
    Location:
    Adelaide and Gold Coast
    I think 6 months are more common in Vic then here from what I've heard.

    In saying that, it does limit the target market a fair bit. Basically looking for people are who looking for an in between option rather than a new home.

    One possible target market might be people who are building their own home and need somewhere to rent til its complete.

    Your best bet might be to talk to local property managers about current rental market there. Some might not be willing to take it on as a management though (6 months isn't enough time for it to start being profitable) but might as a let only?
     
    Ian87 likes this.
  4. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

    Joined:
    18th Jun, 2015
    Posts:
    3,719
    Location:
    Canberra, Brisbane and Sunshine Coast
    There's nothing wrong with a 6 month lease - it could work out well for your tenants too. You might find someone that's looking for an in-between place before purchasing their own.

    As DT said above - chat with a local PM and see what they say.

    Cheers

    Jamie
     
    Ian87 likes this.
  5. Tom Rivera

    Tom Rivera Property Manager Business Member

    Joined:
    1st Jul, 2015
    Posts:
    2,204
    Location:
    South East Queensland
    Nothing wrong with it, just a much reduced tenant pool if you're honest that it'll only be six months. I'd suggest advertising it below market value.
     
    Big Will likes this.
  6. jins13

    jins13 Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    1,967
    Location:
    Sydney
    I've had 6 months rent to see how a potential tenant turns out. Yes, it cost money for the letting fee but find that it's easier to move them on if they turn out to be pretty bad tenants.
     
  7. D.T.

    D.T. Specialist Property Manager Business Member

    Joined:
    3rd Jun, 2015
    Posts:
    8,921
    Location:
    Adelaide and Gold Coast
    Big difference between 6 months trial and 6 months lease. With one at least they know there's a good chance they can stay on.
     
    Big Will likes this.
  8. Big Will

    Big Will Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    2,518
    Location:
    Melbourne, Australia
    As others have mentioned you can advertise it but will likely have a lower pool of potential tenants so either stick to your rent price or drop to make it attractive. You could be renting it to someone who is building a house, just got employment down at Geelong and need somewhere to live and will be looking at buying something or someone on a short term contract (6 months for instance).

    As Tom mention as your rental isn't ideal to a lot of people (most people generally don't want to move every 6 months) the best way to entice them to take up your option is to have the rent below the standard/market rented amount - as your conditions for rent isn't ideal.
     
  9. wylie

    wylie Moderator Staff Member

    Joined:
    18th Jun, 2015
    Posts:
    10,733
    Location:
    Brisbane
    In Queensland (not sure about Vic) you cannot look for tenants if you are moving in and want the concession. If there is a sitting tenant you have to honour the lease, but you cannot renew the lease or issue a new lease to anyone else.

    You need to check this carefully.
     
    qak likes this.
  10. Ian87

    Ian87 Well-Known Member

    Joined:
    23rd Sep, 2016
    Posts:
    198
    Location:
    Melbourne

    Just called SRO, turns out I can't do that. Thanks for the heads up!
     
    Tom Rivera and wylie like this.
  11. Fargo

    Fargo Well-Known Member

    Joined:
    23rd Jun, 2015
    Posts:
    1,304
    Location:
    Vic
    I prefer short tem tenants, for my RIP, short term accommodation can be hard to find, there is no shortage of quality tenants. You can get a premium and much higher yields and much better appreciative tenants. as sometimes their only alternative is motels or caravan parks. I often do 3 months leases, many stay longer, like for years. All my properties begin with a short term lease except one that has a PM. At least with a short term lease you can get rid off them if they are duds.