As an investor and landlord, you should do everything thoroughly and legally. Earning monthly return is not the only you have. Maintain your property while keeping your tenants around are also included into your long-term goal in property investing. To take this matter seriously, you should know about tenancy agreement.
It is one important factors that can help your business to last long.If you are relatively new to rental property investment, or property business in general this can be confusing. However, it is never too late to learn and understand more things you should.
The importance of tenancy agreement
Basically, there are two types of tenancy agreement you should know about. They are periodic and fixed tenancy agreement. Both are equally important. Thus, you need to learn what those are two about and how to make them properly. Here is brief information about it:
- Periodic tenancy agreement runs from short-term period like weekly or monthly period. There is no end dates when it comes to periodic agreement though. It is characteristically more flexible than fixed agreement is. Therefore, decision making can be adjusted. There are many examples of this agreement. For example when the fixed lease has ended but the tenants still need to stay a little bit longer at your property. Thus, they can keep renting and pay rent on weekly or monthly. Basically, periodic agreement is a great way to give time for your tenant to have the fixed one. However, of course, it doesn’t give you security of steady income because it is liable. Periodic agreement is basically quick and predictable. There might be designated timeframe for periodic agreement to last. It is usually around two weeks to two months. It usually depends on the relevant state.
- Fixed tenancy agreement on the other hand has stability to it. It runs for certain period of time and is usually predetermined. It runs around six to twelve months. Since it offers more stability and certainty. This type of agreement is beneficial both for landlords or the tenants. Landlords will get fixed rental income for a set period of time. Meanwhile, the tenants will also feel secure because they have fixed place to stay for a set period of time. This agreement has its weakness too just like periodic agreement. Disadvantages will come when there are rent rises in the market during. Besides, it will be hard for you as a landlord to kick your tenants out if they are irresponsible or making problems during the agreement period.
- There is no need for you to choose which agreement you should prepare for your rental property investment. You need both regardless of pros and cons of them. Periodic agreement help you with the unexpected things that might happen. Meanwhile, fixed agreement gives you security of steady rental income for a set period of time regardless of its inflexibility. Both gives you benefits you need in order to run your property business in the right path so you can grow it even more for the future.