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What You Should Know About Short term VS Long Term Rentals

When purchasing real estate for holiday rental purposes, owners must determine what they want to do with their new home.

Owners can use a variety of parameters to help them decide whether to go with long-term or short-term vacation rentals. 

The majority of the time, this decision is straightforward and based on the nature of your property and your objectives. However, if you are curious about short-term rentals, then you are at the right place. 

Keep reading to know more!

What is a short-term rental?

A short-term rental (also known as a vacation rental) is renting a furnished property for a limited period. These properties are leased by the week or per night, depending on the owner, rental location, and various other factors.

Many owners rent out their short-term holiday rental for the remainder of the year while they are not using it.

Over the last 20 years or so, they’ve become a trendy alternative to hotels.

Will my vacation rental make more than my long-term rent?

Yes! In fact, earning power is the most critical distinction between long and short-term leases. Additionally, according to The Telegraph, short-term rentals can make up to 30% more money than long-term rentals.

According to studies, a rental property that earns AED1,000 per month as a long-term rental might earn three times as much when rented to multiple guests for short periods. So, with the same property, you may make up to AED 24,000 more per year!

What Else Should I Know About Short Term Rentals? 

Higher Returns

Short-term rentals yield significantly better returns than their long-term counterparts and range from 20% to 40%, depending on location, size, and interior design. Guests will always pay a significantly higher rate than tenants, so even after factoring in the extras that owners must offer, such as WiFi and electricity, owners will still profit. Furthermore, short-term returns are constant, whereas long-term returns are fixed throughout the contract. This means that short-term rentals will constantly make you money during three years, whereas long-term rentals will leave you with vacant spaces between contracts, making you no money as you look for a new tenant.

Fluctuating Cash Flow

Short-term rental returns fluctuate month to month due to the nature of the business and the seasonality. The returns in the United Arab Emirates, for example, will be greater in December than in May. Long-term returns, on the other hand, are set for the duration of the contract. Owners that don’t want their returns to fluctuate will prefer a long-term rental with a fixed contract.

Higher Flexibility

In this case, the short-term always dominates. The entire premise of renting out a home for a short period revolves around the ability to utilize it for whatever reason you desire at any time. You can use your property and rent it out to guests whenever you want as an owner. You can also convert to a long-term lease or sell the property at any time. With a long-term tenant, there is no room for maneuvering. You are legally unable to do anything with your property once they have been locked in for a length of time.

Requires Initial Setup

When it comes to short-term rentals, there is much more setup involved. All utilities must be turned on, and the property must be furnished. So, before you can attract guests, there are some basic expenses and maintenance to consider. However, with the rise of property management businesses, owners are no longer required to perform these tasks. On the other hand, long-term tenants are responsible for all utilities as well as their own furnishings.

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Participate in the sharing economy

We hear a lot regarding the sharing economy these days and its societal benefits. By renting out your home to holidaymakers on a short-term basis, you show that you are a forward-thinking individual who contributes to this modern lifestyle and thinking.

Less wear and tear

Vacation rental contracts are typically for a few days to a few weeks. 

Having guests arrive in short bursts like this assures that they are only visiting your property and wouldn’t be considering renovating or moving things around.

In conclusion, short-term rentals are an excellent way to increase income and flexibility while adding to the collaborative economy and meeting new people worldwide. While short-term rentals demand more attention, but the extra cash is well worth the effort.

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