A long term lease is usually thought of as a lease of five or more years. The benefits of this long term lease are both stability and security for everyone involved – the tenant and the landlord.
For the landlord, a long term lease provides stability of income and a guarantee of no vacancy periods during this time. They also allow for a certainty when it comes to forecasting future ROI – the rental price is locked in.
But there are also some disadvantages to this model. Namely, the negotiations can be more complex in order to satisfy everyone’s needs and of course the lease is a bit less flexible. In the case of unforeseen circumstances, exiting the term lease can be a challenge to say the least.
For the tenant, a long term lease is desirable because they have the stability to establish themselves in a specific location, making this rental property their home. This is very attractive for families, who don’t want to move from house to house. Tenants also have the ability to plan their finances for the long-term because they know their living expenses. They also have more flexibility when it comes to negotiations with the landlord due to the fact that reliable long-term tenants are highly sought after.
The risks with long term leases are that in older homes, there may be more maintenance and repair issues to address over the longer lease period. There is also a large financial burden for tenants to meet the rent for the next five years.
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