Short-Term vs. Long-Term Rentals: Which is Better?
When you decide to become a real estate investor/landlord, you’ve got multiple decisions to make -- rental rate, insurance, marketing, tenants, you name it. One of those decisions is what kind of rental you want to have. Short-term rentals are popular in vacation destinations like the Emerald Coast. Long-term rentals help people moving to the area find a home. Neither is better or worse than the other.
How do you know what’s best for you? It depends on your goals and what’s best for your property.
The Pros and Cons of Short-Term Rentals
No single method is perfect. If you don’t understand both the pros and cons of an option, you’ll often find yourself surprised in the worst possible way. Short-term rentals are no different. In this case, vacationers and visitors rent your property for three to 10 days at a time. That sounds simple enough, but there are a lot of things you need to know for it to be successful.
Here’s what’s good and bad about this option.
● You’ll get more personal use out of your property. If you want to use it for your own vacation, you can block off time when it’s not available to rent.
● It’s easier to adjust your rental rates. You can base your price off of current demand or the season.
● Your property will experience less long-term wear and tear as people come and go quickly.
● You can check on your property more often and more easily. While you can inspect your property with long-term tenants, it requires much more effort and scheduling.
● You have to keep your short-term rental furnished and upgraded. Renters won’t bring anything with them other than luggage and what they need for the beach. You’ve got to supply the rest.
● You’ll have to pay the utilities. Short-term renters aren’t worried about saving electricity or water so your bills can be high during peak rental season.
● You must abide by local and county rules and regulations regarding short-term rentals. Some areas don’t allow short-term rentals at all, and other areas have requirements you must meet first.
● Be prepared to constantly market your property to keep it from being empty when you want to make money.
The Pros and Cons of Long-Term Rentals
Long-term rentals are much more common for houses and townhomes, although condos can definitely be rented long-term. Whether this is a good option for you or not depends on what you want to accomplish with your property.
● Long-term rentals offer stable income. Renters stay for a year or longer, and they pay a set amount each month.
● You don’t have to worry about furnishing the property, as tenants bring their own.
● Tenants pay the utilities each month in most cases, although there are some exceptions to this.
● Unless you live in a restrictive HOA or COA, turning your old home into a long-term rental is relatively easy.
● It can be difficult to remove bad tenants. Eviction is an option for bad behavior but it can be a long and expensive process without help.
● You can’t use your home as a vacation property.
● Late payments are usually a long-term landlords biggest headache.
● You can’t inspect your property for damage as often or as easily as you might like. And you have to fix problems as quickly as possible because tenants living there need full use of the property.
No matter which option you choose, professional help is available. A good property management team makes your life easier and can help you meet your investment goals. Contact ERA American Real Estate today. We’ll walk you through the best options for your rental property and help you manage it from beginning to end!