One of the most crucial factors for property owners to consider is whether to target short term or long term renters. Each type represents a separate segment of the rental market, and presents different challenges.
In this article, we’ll take a look at both short term and long term rentals, so you can determine which option is ideal for you.
Short term rentals
One of the most obvious advantages you can get with short term rentals is the ability to use the rental property more frequently throughout the year as a vacation home, since it won’t remain occupied for a full year. You can also potentially earn a higher rental income, since rental properties typically increase in price during the peak season.
Some cons of short term rentals however include the need for additional upgrades and furnishings, since you will need to constantly update your home for marketing purposes so it can remain attractive to buyers. There are also plenty of things to manage since guest turnover is high, including check-in/check-out time tables, booking calendars, cleanings before and after rentals, and so on.
Short term rentals are not always the ideal option, since they can be a bit too unstable not just for owners, but also to the neighborhoods where the rental is located. Many companies also fail to thoroughly screen short term tenants, which can sometimes be a problem for current residents living in the community.
Long term rentals
Many agree that long term rentals are a better option for investors, as they are able to generate a more consistent and stable cash flow without the need for frequent updates and furnishings. Long term renters can help protect the investment’s value, especially if tenants are screened properly – the right tenants are usually responsible and will diligently maintain the property. In addition, monthly rental fees can also be charged to the tenant, in case the property requires maintenance.
It is important to note however, that a long term rental gives a landlord less flexibility compared to a short term rental. Should the landlord decide to use the property, he or she needs to plan well in advance. Moreover, the amount of tenants in search for a long term rental is typically lower than the number of guests looking for a short term setup.
Finding the right tenant who is able to pass reference checks can also be difficult at times, which can lead to the property remaining vacant for extended periods of time.
Proper balance
Long term rentals are a great option for owners who do not need to use their properties for long periods. Managing a long term rental is also significantly easier compared to short term rentals.
On the other hand, a short term rental can provide a higher rental income when considering the total income per year. This is the primary reason why many landlords choose to go with the short term rental option, even if it requires more management.