When you think of offering your rental, you typically think of a year-long lease arrangement: bringing in one set of renters who are committed to living in your house, apartment, or condo for at least a year, and hopefully signing a new lease at the end of that year so you don’t have to worry about finding new renters. Short-term rentals, on the other hand, also have several key advantages – and while they may take a little more management, you may find they help you better reach your overall needs.
What Are Short-Term Rentals?
Short-term rentals are fully-furnished homes, often condos or apartments, that are rented out on a short-term basis. They are intended as vacation getaways with all the comforts of home for guests and often attract large families, parties that are vacationing together, or groups traveling for long-term business. Most of the time, rental agencies prefer to put up their short-term rentals for a minimum of a week-long stay; however, they will sometimes allow for overnight or other shorter-term stays, especially for weekend travelers. Short-term rentals mean that landlords are typically dealing with a different set of tenants every week.
Advantages of Short-Term Rentals
Short-term rentals are very popular, especially in vacation areas that rely heavily on tourists to make up the bulk of their local economy. If you choose to list your property for short-term rental, you’ll experience a number of advantages. Make sure to include plenty of photos as well since people on vacation like to know exactly what they will be getting.
You’re not tied to a tenant. That means if you’re ready to sell the property, you don’t have to worry about moving the tenant out so that you can show it. You also won’t have to worry about getting “stuck” with a tenant who refuses to pay rent, but who must be legally evicted before you can force them to move on.
You can use the property yourself as a vacation home. If you own the property, you have the ability to block out weeks when you want to be there for your personal vacation – and you won’t have to pay rental fees to vacation in the area of your choice.
Short-term rentals can often bring in more income than long-term rentals. Short-term rentals are listed at much higher rates than long-term ones, which means you can substantially increase your income – especially if you’re in a desirable area that has plenty of tourist traffic year-round.
It’s easier to keep up with repairs. Short-term renters come and go all the time, and you’re more likely to inspect the property regularly – not to mention the fact that short-term renters may be less likely to cause the kinds of regular wear and tear you see from long-term renters.
There are a number of tax breaks associated with short-term rental properties. Often, you can deduct the cost of maintenance from your taxes. Working with an accountant will give you a better idea of exactly what tax breaks you’re eligible for when it comes to your short-term rental property.
The Advantages of Long-Term Rentals
Opting for short-term rentals has its advantages. Choosing a long-term rental option for your property, on the other hand, will allow you to experience a number of other unique advantages.
You’ll have a longer lease length. With a year-long lease, you’ll know your property will more than likely be consistently rented for a year. That means no variance by season and no struggle to keep your property rented during low-traffic seasons in your area.
You won’t have to advertise as often. Short-term rentals need to be advertised constantly in order to get the word out that you have a property that needs renting. With a long-term rental, on the other hand, you’ll only need to advertise when you have a tenant leave.
You don’t have to worry about utility payments. With a long-term rental, renters usually take care of their own utility payments. This means no unexpectedly high bills because a short-term renter has chosen to blast the air conditioner or leave the door open with the unit running.
Renters will take care of the maintenance. Yard work, minor repairs around the house, and other little details of upkeep will often be handled by the renters, depending on the way your contract is written. Long-term renters may also be more likely to let you know if there are issues creeping up that could turn into big problems if they aren’t handled since they’ll have to live with them longer than a short-term renter.
There’s not as much turnover. With a long-term rental, you won’t have to worry about dealing with new tenants every week. You’ll know what to expect from your renters: are they taking good care of the property, or do you need to keep a close eye on them to make sure there hasn’t been any fresh damage? Will they pay on time, or is the collection going to be a struggle? With long-term renters, you have time to get to know their personalities and how they’ll react.
Which Rental Option is Better?
When you choose to rent out a vacation property, deciding whether you prefer short-term or long-term rental agreements is a major decision. Ask yourself several questions when it comes to choosing the option that’s right for you.
How hands-on do you want to be? Keeping up with a short-term rental property can require more hands-on interaction from you – or, if you don’t want to do it yourself, from your management company. How much involvement do you intend to have with the property?
Do you have the right amenities to offer short-term renters? While short-term rentals may be more financially lucrative, they may also require a higher start-up expense, including fully furnishing the property, providing kitchenware and linens, and ensuring the home has all the amenities your renters are looking for when they’re on vacation.
Do you want to be able to use the property yourself? You’ve purchased a gorgeous property in a lovely vacation area. Do you want to be able to use it? If you intend to stay in the property yourself, even for only a couple of weeks a year, offering it as a short-term rental can help that property bring in additional income while still allowing you the freedom to vacation in the comfort of home.