If the idea of renting your property sounds tempting, but you’re unsure about the financial possibilities, you should definitely look for the pros and cons between short-term rental (vacation rental) and long-term rental.
Some prefer to rent their apartments for short periods of time and to multiple guests throughout the year, while others opt for a long-term lease (usually from three to five years). To help owners in their decision making, we have put together a list of pros and cons that can be useful.
Short-Term Rentals
– Depending on your location you can rent out your property on weekly or nightly rates. Variable rent means higher risk, but still, the average annual income will be higher compared to long-term rentals.
– There’s the possibility to charge higher rates around holiday season and popular travel times.
– Vacation rentals have grown in popularity in recent years for many reasons, especially because they often offer more privacy and space for a lesser cost than hotels.
– The owners have more control over the house and flexibility to choose exactly when in each month their property is available to rent. They are also able to use the property as long as there are available dates.
– There is a big tax break for short-term rentals, since VAT for local accommodation is around 6%, while long-term leasing taxes go up to 25%.
– Short-term rentals involve intensive management, specially when guests turn over. Owners also have to be constantly on top of marketing and advertising the property in multiple booking channels.
– Cost operation can be higher than in long-term rentals, since you are responsible for all the utility bills and for the cleaning and laundry services. More routine maintenance may also be needed.
– Short-term owners must provide a lot more in the way of amenities than long-term tenants do. Utilities are a given, including TV and wireless internet if you wan to stay competitive. Many successful short-term property managers like to throw in enticing goodies to give that special touch.
– The property must be fully equipped and furnished, including bedding sets and towels.
Long-Term Rentals
– The owner rents out the property on a long-term basis, receiving monthly payments. Long-term rentals provide a more consistent income, but much lower turnover rates.
– With long-term renting, the owner often has less flexibility choosing when to use their property since the space is rented out for longer periods of time.
– There is virtually no management workload and operational costs are much lower, since you’ll be spending less money on ads.
– The property can be rented out empty or fully furnished. This is never an easy decision and can have a deep influence on your future tenants.
– Utility bills, like water, electricity and gas are not usually included.
Both options offer different pros and cons, but only one is the right for you. If you prefer a more stable, guaranteed income then the best is to go for long-term rental. If you want to try to maximize your revenues, then short-term rental is definitely the way to go.
Find out how BnBird can help you start your short-term rental business and make it hassle-free. Contact us and forget about marketing, advertising, management and most of the operational costs. You might be surprised.