Short-Term vs Long-Term Rentals: Which Will Give You More Profits?

Airbnb 101 Feb 2020 Are short term rentals a more attractive option than long term rentals?

With the short-term property rental sector exploding in popularity over the recent years, many people are left wondering why. Is it genuinely profitable enough that these homeowners are willing to deal with the stress that comes with it?

It cannot be denied that renting short-term is a lot of hard work. New guests will keep coming in and out of the property. There is also a steady stream of enquiries, which the homeowner or property manager has to address regularly. Other tasks, such as cleaning and preparing the house, are demanding as well.

Meanwhile, long-term renting seems much more relaxed. It is mostly hands-off, allowing the homeowner or landlord to simply collect rent every month.

With these two options, it does appear like a no-brainer that long-term easily trumps short-term renting. If it is the case, why do more homeowners, investors, and other professionals prefer short over long-term?

In reality, both of these options come with their own challenges. They can also be rewarding when handled correctly. In today’s fast-paced world, however, one out of these two is the clear winnerespecially if your goal is to earn more revenue.

The Benefits and Challenges of Short-Stay Rentals

Renter turnovers are what short-term accommodation options are mostly made of. They involve a lot of processes, including guest screening, approving booking requests, and answering numerous questions daily. The quickness of the whole sector makes it exciting for homeowners.

Because of the fast turnover from one guest to another, owners do not have enough time to get to know the guests. If you run a rental property, you probably want to know a little bit about the people you are entrusting your home with.

At the same time, you should also take note of the logistics. You are responsible for organising your short-term rental calendar to make sure the property is not vacant for a long time. You also need to increase the number of bookings whenever possible. To maintain good revenue, it is necessary to adjust your prices based on certain factors, including upcoming events and even the weather.

When you choose a short-term rental, you are responsible for cleaning your home between guests. You also have to stock up on items that are crucial to keeping the renters comfortable. These essentials include ingredients in the pantry, shampoos and soaps in the bathroom, and clean sheets and pillows.

Perhaps the biggest challenge is convincing the guests to choose your home in the first place. It requires a good strategy, especially when it comes to marketing the accommodation.

But apart from these challenges, short-term renting has many benefits, including:

  • Owners can block off dates when they wish to use the property.
  • Often, short-term accommodation becomes extremely popular on weekends. During tourism seasons, these homes receive plenty of calls as well. However, the owners still get a nice quiet time when they do not want to rent out their place. Such a convenience also reduces the wear and tear tendency that often occurs in long-term renting.
  • It is a lot of work to clean between guests. However, if you take a good look at the positive side, your home is well-maintained all-year-round. The same thing cannot be said with long-term accommodation. Short-term renting makes it much easier to identify if any maintenance issues may require attention before they get worse.
  • Homeowners who have joined the short-term rental sector also enjoy the ability to adjust their pricing. The flexibility of the rental price offers many benefits, especially in terms of earning potential.

Management of short-term rentals has become much easier over the last few years. With the existence of platforms, such as Airbnb, homeowners no longer have to treat their rental space as a second job. It is quick and painless to advertise properties today.

Plus, it’s equally as painless for guests to quickly search 1000s of properties in their chosen location.

Airbnb makes it easy for property owners

Airbnb makes it easy for property owners and guests

Advantages and Disadvantages of Long-Term Stays

A huge benefit of being in the long-term rental sector is that you only need to commit to one tenant for an extended period. You do not have to worry about finding new renters. On the outside, it does look like there is not a lot of work involved. You usually just need to find one tenant to impress, so you never have to talk to different travellers almost every few days.

Unfortunately, it also means that you have a binding contract. If you have a problem with the renter, it is not easy to find a solution. In this case, finding the right tenant is even worse with long-term stays. It takes a long time and can be an exhausting process.

Think about it; some temporary guests may not be courteous and nice. However, short-term rental property owners can breathe a sigh of relief once they leave. Long-term accommodation will not give the same peace of mind to you.

Another challenge is enabling the renters to take control of your property. They gain most of the power that should only be yours. Some contracts even allow the renters to modify the home. On the other hand, short-term stays require the guests to leave after a night or so. They do not control the premises. The guests simply hand over the key once their stay is over.

Finally, you cannot tell the renters to leave when you need the house. Only short-term rentals enjoy the luxury of turning their home into a temporary “hotel.” Then, they can have it back whenever they want.

Nevertheless, many people still believe that long-term renting offers more benefits than short-term accommodation. The unquestionable advantages of traditional renting include:

  • The tenants pay the bills. If you are a landlord, you usually have to collect the rent payment of your tenants every month. It is their responsibility to pay for their utility bills, which is why renters often conserve water and electric consumption.
  • While tenants do not take care of the rental homes entirely, they still have to handle most maintenance issues. Short-term accommodation puts all the responsibility to the owner, including cleaning and even stocking supplies, such as toilet paper.
  • Since there is low turnover with a long-term rental, you only have to focus your efforts on finding one tenant. When a renter enquires, and you both have an agreement, you do not have to keep advertising your home to potential tenants.

The Better Deal

As you can see, long-term renting looks so much easier than short-term renting. Once you have found the right tenant, you just have to wait for the monthly payments. There is less stress, along with the benefit of a steady income.

If it is indeed the case, why are there more and more long-term property owners switching to a short-term rental?

The reason is quite straightforward, and it is none other than the discrepancy in earning power. This factor perhaps holds the most weight in the world of business, including short and long term rentals.

In other situations, such as buying in bulk, you pay less. As a customer, on the one hand, you are saving a lot of money compared to purchasing the items individually. On the other, you are earning less if you are a marketer. In the real estate market, long-term renting is comparable to wholesale in trading.

Since short-term stays only last for a short while, they involve one-time expenses on the part of the guest. Therefore, their inflated rates are acceptable. Telegraph UK’s research showed that short-term lets enjoy 30% more profits than rentals whose tenants stay for several months to a few years.

The earning potential can even go higher depending on certain factors, such as upcoming events and the location itself. Some reports have demonstrated that the difference in profits for the same property. In long-term accommodation, a home can cost $1,000 monthly. However, when rented for a short time, it can yield up to $3,000.

That is more than double the total monthly income.

If you keep your home open for the whole year, you can earn $24,000 more than long-term renting.

Let us be clear here. Yes, renting short-term does require more work. You need to be involved in the business, and you have to provide time for your property. However, the substantial extra profit is more than enough to convince you it is worth the investment – money and effort-wise.

The good news is that there are several practical tools today that can make your job easier. You can turn to a property management team that will help you win more rewards out of your home. They allow you to automate specific tasks and even manage your property without you being physically present. All you need to do is to collect your profits. You still run the game, but you can focus on other important things, such as your main job or your family.

Join other homeowners who have listed their properties on Airbnb. You get to enjoy many benefits, such as freedom, flexibility, and higher profits. Don’t know where to start? Get the guidance you need by talking to our experts here at BnB Hosts today!