05 May What should an apartment investor do when the lease ends?
As an apartment investment owner you generally want a good renter on a long term lease, but what should you do when that lease comes to an end?
It is reasonably common in Melbourne for a renter who has been in an apartment for 12 months to stay on a month to month basis (periodic lease) for many years. They may love living in your apartment and are a great renter but they are just not sure what lies around the corner. They may be just an amazing job offer or tinder swipe away from a change in work, life or love that triggers a need to move home.
An owner may not be obliged to let a renter stay on a periodic basis but if the other option is finding a new renter which incurs additional costs and some vacancy, then a monthly lease is perhaps not such a bad option especially if they are a good renter.
The other consideration is if you are the owner and have plans to sell the property in the next 1 or 2 years then a monthly tenancy is perfect. In the current market almost all buyers are owner occupiers who want to move in at settlement and the flexibility of a monthly tenancy can work in the owners favour.
Interestingly if a renter is on a month to month lease, the owner can not ask them to move out unless they are selling the apartment, moving in themselves, or the renter defaults on the lease. It is therefore helpful for owners and renters to work closely with their property manager to get the best outcome.
In different markets you may be chose different options based on how the market rent compares to the current rent and the demand for similar apartments.