This is my first IP. My property manager found a tenant who is happy to take 12 or a 24 month lease on my property in north Perth. Older couple, no animals, two incomes and zero issues with rent history. Rents are currently shooting up and they've hit their 2013 peaks: Do you believe it would be wise to lock in a 24 month lease in this particular situation? Or do you think it really doesn't matter either way and I shouldn't be so pedantic about little details like this?
I'm usually a fan of not being pedantic about tenancy issues, but I would hardly call the decision of a 12 or 24 month lease as a pedantic one! You need to understand the pros and cons and then apply them to your own situation. Do you know what the effects are for things like termination (both ways) and rent increases? And do they line up with your plans for the property?
12 months is extremely common and preferred over 6 months. It shows that tenant is long term and just not in between houses. I have only done 24 month once and added a CPI rent review at 12 months point in the lease. It worked well for us.
https://www.google.com/amp/s/thecon...lation-rate-is-3-8-is-it-time-to-worry-165098 Great with CPI rates
We don't recommend 24-month leases to any of our landlords for 2 reasons: 1. With rents going up so quickly you may find your property under its rental value. 2. If your situation changes or a better option comes along and you wish to sell, then you are restricted in who you can sell the property to as you have a sitting tenant. An owner occupier can’t buy it.
I would lean towards 12 months in a rising market, the tenant can be offered a longer lease in a year's time if you're still amenable and the tenant has performed. I wouldn't advise CPI on a residential property unless there are exceptional circumstances (eg falling market, over supply). CPI is too hard to implement as it requires 60 days notice to marry up with lease anniversary & comes out quarterly.
