Are you thinking of using your second home as a source of income? If you have an empty house and don’t want to sell it off, renting it to potential tenants is a great idea. But one question arises. Should you offer a short-term rental or opt for a long-term rental?
While both can be appealing, you want to choose the option that offers the most benefits.
Don’t worry. We’re here to help. In this guide, we will give an overview of some of the pros and cons of both short-term and long-term rentals. That will help you determine the type of rental which suits you the best.
But first, let’s find out about what each of these means.
What is Considered a Short-Term Rental (STR)?
We often refer to this type of rental as a vacation rental. Short-term rentals are furnished residences that landlords rent out to travelers who need a rental for just a few nights to a month. The duration can depend on the market where your house is located.
Since guests need to stay for only a few days or weeks, they prefer a rental instead of a hotel. That way, they can enjoy more space and better amenities, such as a washer/dryer or a kitchen.
This type of lease is ideal for tenants who are:
- Visiting family or friends in a city/town for business and looking for temporary accommodation
- Moving around the country for personal/work projects
- Tourists or overseas travelers on a medium or short-term visa
- Awaiting a home sale
- Flipping or renovating their property
What is Considered a Long-term Rental (LTR)?
There is no set definition of a long-term rental, and it varies from state to state. For example, the lease can be a term of at least 30 days in some states, but it can be 180 days or longer in other states. Typically, one-year lease terms are most common.
Long-term rentals are suitable for people who:
- Need stability: people who want to establish themselves in a specific area/location.
- Stick to long-term financial plans: With Long-term leases, tenants can determine their rental expenses to stay on track with your budget.
- Like flexibility: Landlords who offer long-term leases are more flexible. Tenants usually get more features like a sub-lease option or renovations.
Now let’s look at the pros and cons of both short-term and long-term rentals.
Short-term Rentals: Pros and Cons
More popular as vacation rentals, short-term rentals are gaining momentum because they allow tourists and travelers to stay anywhere from a few days to a few months. They can be furnished condos, apartments, or houses. While these homes are as beautiful and appealing as hotels, they are more spacious and affordable.
Pros of Short Term Rentals
Short-term rentals are more lucrative because the rent is usually twice the rent of long-term rentals. In addition, landlords can easily triple or at least double their regular prices if a sporting event, convention, or festival is in town. That’s a great way to earn enough cash in a week or two.
If you have short-term rentals in major cities such as Los Angeles, New York, Washington DC, San Francisco, Seattle, or Boston, you can ask for twice the rent of long-term rentals.
While long-term rentals are unfurnished, short-term rentals are furnished. That’s why you need to include a one-time furnishing cost, usually ranging between $3,000 to $5,000.
Another benefit of this type of rental is that you can change the rent according to your area’s low and high seasons. So, for instance, you can lower the rates when the season is slow and increase them during the busy summer season.
As a host, you get to choose when to offer your space and for how many nights or weeks. That helps you set the maximum stay length or block off your calendar.
Easy and Low-Cost marketing
You can quickly post your property for free on many short-term rentals. But remember that the key to making your rental stand out is using detailed descriptions and good visuals.
Cons of Short-term Rentals
Upkeep and Maintenance
Ensure no broken air conditioners, dirty floors, or worn-out towels in your rental. Tourists and travelers quickly post negative reviews, so make sure you pay special attention to maintenance.
No Fixed Rental income
Short-term rental bookings depend on how busy or slow the season is. Hence, you can’t guarantee a fixed rental income throughout the year. However, you can ensure a steady stream of off-season bookings by including amenities like a hot tub or indoor pools.
Too Many Responsibilities
Managing and owning a vacation home requires a lot of work. Cleaning, marketing, messaging guests, keeping up with your online listings means you can have too much on your plate. Great Dwellings offers all these services to become Super Host on Airbnb. We take care of everything from screening to determining the right price and maintaining your property.
Many homeowners are unaware of the rental regulations in their respective states. Make sure you get in touch with your local municipalities about any necessary permits and regulations.
Let’s look at the pros and cons of long-term rentals.
Long-term Rentals: Pros and Cons
Pros of Long-Term Rentals
Although earning income with long-term rentals requires patience and commitment, you can ensure a fixed monthly throughout the entire year. Hence, the most significant benefit of long-term rentals is steady income. In addition, residents pay for their utilities, such as electricity, gas, WiFi, and water.
Easy to Manage
There is little left to manage once you find a reliable tenant for your property—no more cleaning, marketing, or worrying about the fluctuating rental market.
There is little left to handle once you find a tenant for your long-term property. Not only do long-term tenants pay their utility bills, but they also take care of the upkeep of the property. Landlords only step in to tackle maintenance and repair projects.
No Furnishing Costs
Since residents usually bring in their furniture, you don’t have to spend a fortune on furnishings for the house.
You Get a Security Deposit
Before tenants move in, landlords ask for a security deposit to ease any worries about property damage. You can give back their deposit once you are sure that there is no damage to your property.
Typically, long-term tenants secure a year-long lease. That means less turnover and less hassle about running security checks to find new tenants.
Cons of Long-Term Rentals
Less Potential for High Income
You can’t adjust rates to match peak season. In addition, tenants pay much less than tourists would on their trip. So, your one-bedroom property, currently on $1,000, could generate much more like a vacation rental, depending on amenities and location.
If you want to remove a problematic tenant, eviction may take time and legal fees. That means you have less control over your property. On the other hand, you don’t have to make any long-term commitments if you rent out your property as a short-term rental.
Higher Risk of Damage
Since long-term renters live on your property 24/7, there could be more wear and tear or damage over time. Furthermore, you won’t know about any broken windows or blinds unless you visit the property for inspection regularly.
There are hundreds of reasons why property owners list their rentals on short-term rental booking platforms like Airbnb. Great Dwellings can help you earn thousands of dollars through short-term rentals without any hassle. Contact us to find out more.
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