Long Term vs. Short Term Rental PropertiesThere are pros and cons to both long-term rentals and short-term rentals – however, the state of the world today has taught us that we need to be ready to adapt quickly so we can get the best ROI as property managers. Going from a short-term to a long-term, and vice versa, should be determined based on several factors including location, financial goals, and time. Make sure you always assess your options and research the market so you know what the smartest options for your rental business will be.
Pros of Long-Term RentalsLong-term rentals have many advantages when it comes to property investing and can help you fulfill your financial goals as a landlord. Here are some of the greatest benefits to long-term rentals:
- Cash Flow: Having a consistent cash flow is one of the most obvious advantages of a long-term rental – with a lease, you are guaranteed to receive rent from tenants (make sure you screen renters).
- Longer Lease Length: With long term rentals, tenants sign a lease agreement for a certain amount of time – even if it’s month to month, this is still more money in the bank for you versus weekend travelers and the unpredictability of filling in guests for short-term rentals.
- Less Advertising: When you’re trying to fill your long-term rental, you’ll need to utilize online resources to market your properties, but once you fill it, there is no further marketing necessary. This is the opposite of short-term rentals which you always have to advertise on Airbnb and other vacation rental sites.
- No Utilities or Frequent Upkeep: Since tenants are living in your rental long-term, they will typically cover utilities (which should be specified in the lease). Additionally, with long-term rentals, tenants usually take care of the property when it comes to cleaning and basic maintenance to keep the property in shape – short-term rentals require frequent cleaning and small repairs that you’ll have to pay for.
Challenges with Short-Term RentalsWhile short term rentals can be a great option for certain types of rentals and locations, there are many drawbacks that have been further unveiled by the coronavirus pandemic.
- Seasonal and Timing Issues: A lot of vacation rentals are only populated during busy summer months or around holidays – this means you could be stalled on filling them. Furthermore, on top of seasonal issues, the current travel climate is at an all-time-low and will make future travelers cautious and the market more competitive for short-term rentals.
- Need for Constant Cash Flow: Unless you’re in a prime vacation destination, there can be competition or a low need for short-term rentals – this means your cash flow will be less and you’re missing out on collecting monthly rent payments.
- Have to be Fully Furnished: Because you are providing a short-term stay for people out of town, short-term rentals have to be fully furnished with the necessary amenities to make your guests’ trip enjoyable – such as towels, linens, tvs, kitchen utensils etc. Almost like a hotel, but you are the one who has to furnish and arrange cleanings after every guest.