Long Term vs. Short Term Rental: What’s Right for You?

short-term-vs-long-term-rental

Before you put your rental property on the market, you’ll need to decide whether you want to offer long-term or short-term rentals. To make the best decision, it’s important to not only know the difference between the two but to also realize the benefits and drawbacks of each. 

In our guide to long-term and short-term rentals, we’ll go over some of the key things landlords should consider so you can make the best choice for your property. Let’s get started.

The Pros and Cons of Short-Term vs Long-Term Rentals

What’s the Difference Between Long-Term and Short-Term Rentals?

A short-term rental is often defined as one that lasts less than 31 consecutive days. Sometimes it can last a bit longer. Short-term rentals can also be referred to as vacation rentals. That’s because many people own homes they rent out exclusively to vacationers depending on their location.

Long-term rentals are usually considered anything that lasts longer than six months. Common types of long-term rentals are apartment and house leases. Business and industrial properties are also typically long-term.

Other options can include an Airbnb-style rental. This can be done either for the short-term or long-term. Typically, these are not vacation-style rentals. They come in handy in situations when someone is in town for an extended period of time. For example, a sub-contractor on a 3-month contract may prefer Airbnb because it’s easy to send the bill to their client.

If you can’t decide whether short-term or long-term rentals are the best match for you, consider some of the advantages and disadvantages of short-term rentals below.

Short-Term Rental Pros

1) You can earn more money.

If your short-term rental property is a vacation home there is a greater potential to make more money, especially if people are renting for a week or two at a time. If your property is in a popular tourist spot, your income potential can be very high during the summer months. 

You also have the option of changing the rental amount depending on the rental week. Many property owners do this when they know there is a time of the year that is popular.

short-term-rental-pros

2) You can also use the property.

With a short-term rental, especially one that is a vacation home, there is the option for personal use. That means when you want to go on holiday or spend the weekend with the family, just reserve that block of time for yourself.

3) You can limit some of the renting risks.

Being a landlord is a big commitment. The responsibility comes with potential risks, such as tenants who don’t pay or time or damage your property. With a short-term rental, the commitment isn’t ongoing, so it’s a lot easier to manage.

Short-Term Rental Cons

1) Your income can fluctuate.

With a short-term rental there is a chance that you may have blocks of time with no rental income. Some property owners don’t mind taking this chance, while others don’t like the risk.

2) You’ll spend more on cleaning costs.

With a higher turnover rate, especially with a vacation property, you can expect more cleaning costs. Every time a tenant moves out you’ll need to have the home deep cleaned. Even with a contract, this can get pricey.

short-term-rental-cons

3) You may need to hire a Property Manager.

Because the property is rented to different tenants so frequently, the appliances, sinks, and toilets need to be checked routinely. No one is going to want to rent a home with a broken refrigerator or one that has plumbing problems. 

Some landlords choose to hire a property manager for their short-term rentals. That way, they don’t feel as though taking care of their property is another job. You have to weigh whether the cost is worth the convenience.

Long-Term Rental Pros

1. You’ll earn steady income.

When you have a property rented for a longer time, you know you’ll have a reliable source of income. This can help you be more financially secure and plan for your next investment.

2) You might see fewer maintenance fees.

Because the turnover rate is not as frequent, you should have fewer maintenance fees. You won’t have to pay a cleaning company to come in as frequently because you’ll have the same tenants for a longer amount of time.

Long-Term Rental Cons

1) You can’t raise rental prices once in contract.

When you offer a long-term rental, you need to keep the price consistent for the length of the lease. While this offers reliable income, you lose the chance to increase it for any reason until your agreement is over.

2) You will have the tenants for longer periods of time.

If you have problem tenants, you may be forced to look into eviction. No one wants to do this because it can be costly and lengthy. To find out just how costly, try our eviction calculator.  

To avoid troublesome tenants, SingleKey offers a thorough yet easy to read Credit and Background Check. Our screening report gives you the information you need to feel comfortable with who is living in your rental property.

Key Takeaways

Short-Term Rental Pros

      • Potential for big financial gains
      • You can use the property as well
      • Limit some risks of renting

Long-Term Rental Pros

    • Earn steady income
    • Fewer maintenance fees
      •  

Short-Term Rental Cons

      • Income can fluctuate month to month
      • Higher cleaning costs
      • May need to higher property manager

Long-Term Rental Cons

    • Rental rates are locked in
    • Harder to evict bad tenants

Long-Term vs Short-Term Rental: How to Decide

There’s no easy answer to choosing the type of rental property that’s best for you. Both long term and short term have their benefits and drawbacks. So it’s worth taking some time to consider where your property is located and how much time investment you’re willing to put into maintenance, cleaning, and tenant interactions. 

Whether for three months or three years, one thing is for certain: the right tenant can make all the difference. A thorough background check can help you find applicants that are perfect for your property. Book a call to learn more about SingleKey’s tenant credit report for landlords.