Having multiple sources of income has always been the way to go, and perhaps if you have an empty house or a basement to rent, you are definitely looking for ways to profit from it.
A decent way to use this vacant house would be to rent it. Renting your home short or long term can be very profitableespecially when done correctly.
However, the entire process takes time and involves many legal responsibilities. So, you’ll need to do some research before choosing your rental approach.
To be completely frank, no rental model is “better” than another. It’s just a matter of finding out which one best suits your needs and situation. Let’s take a look at what you need to know about long-term rent in Canada.
Long-term rent in Canada
Long-term rent basically starts from a period of one year.
As the contract is long-term, it offers little flexibility in terms of agreement. However, there are still many advantages when it comes to long-term rentals.
Benefits of long-term rent in Canada
Now let’s look at some of the benefits of renting your property long term versus short term.
1. Constant rental income
One of the crucial elements of being a profitable landlord is maintaining a stable cash flow, and long-term residences provide that.
With long-term residences, you will earn a regular, regular income every month.
2. Moderate passive income
Long-term rentals, compared to short-term rentals, are relatively easy to manage.
This is particularly true provided you are hardworking and find a good tenant.
From experience, a good tenant will always pay their rent when due and help take good care of the rental property in their possession.
3. Mortgage payments
Unlike short-term rentals, mortgage lenders are always keen to allow long-term rentals. This is because most lenders expect an AST rental agreement of at least 6 months.
4. No need to furnish the house
Most long-term tenants come with their furniture.
And so, you don’t have to worry about furnishing your empty property. Not having to spend on furnishing your home saves a lot on the expenses involved.
Disadvantages of long-term rent
Now let’s look at some of the disadvantages of renting your property long term versus short term.
1. Lower rates
Homes are offered at a much lower rate when offered long term compared to short term rentals.
This is one of the main reasons why owners always prefer to play the short-term game.
2. Legal requirements
The level of excessive bureaucracy when it comes to Assured Short Term Rentals (AST) is quite overwhelming, and it continues to get more complicated by the day.
Contrary to popular belief, most short-term rentals are also ASTs. This implies that the same regulations and legal requirements apply to long-term and short-term residences.
For short-term rentals, occupiers have little need to rely on their legal rights as they are staying for a short period, which explains the laxity in short-term legal requirements.
However, when it comes to long-term rentals, occupants make the residence their home.
This is why numerous checks are carried out to ensure that all legal obligations and contracts put in place are correct, especially for the self-preservation of the owner.
3. Tenant Nightmare
Evicting disbelieving tenants can really be a thorn in the side.
The financial implications incurred by landlords in the process of evicting a dishonest tenant are always high.
Indeed, it takes a few months to evict a tenant who refuses to pay rent and during this time, landlords must continue to pay overhead costs, such as a mortgage.
The problems landlords have with dishonest tenants are just indicators that landlords are not adequately protected against dishonest tenants.
Final Thoughts
The decision to opt for long-term rent will be strongly influenced by your situation.
However, let’s say you are particularly concerned about the stability of your rental income each month. In this case, the best choice for you will be long-term rent.
However, long-term rent works best when you have a decent tenant and your relationship with such a tenant is relatively healthy.
Thanks for reading. Let me know your thoughts and comments below.
