To help you choose, we made a guide that explores the pros and cons of each option to help you determine which option is most suitable for your situation/
Advantages of Long-Term Rentals
Consistent Income
One of the primary benefits of long-term rentals is the steady, predictable income stream they provide. With tenants signing leases for six months to a year or more, you can count on a regular monthly payment. This consistency can be especially valuable if you cover mortgage payments or other fixed expenses related to property ownership.
Reliable Property Value
Long-term rentals often contribute to maintaining or even increasing your property's value. With tenants residing in the property for extended periods, there's typically less wear and tear than the frequent turnover of short-term rentals. Additionally, having a history of successful long-term rentals can make your property more attractive to future buyers if you decide to sell.
Lower Overhead Costs
With long-term rentals, you'll generally face lower operational costs. You won't need to constantly clean and prepare the property for new guests, stock supplies, or manage frequent bookings.
Tenant Screening
Long-term rentals allow for more thorough tenant screening processes. You can conduct background checks, verify employment and income, and check references to ensure you rent to responsible individuals. While short-term rental platforms like Airbnb offer tenant information, they do not dive deep into their rent history and financial situation.
Fewer Restrictions
Many cities and homeowners associations have strict regulations on short-term rentals, but fewer restrictions on long-term rentals. When opting for traditional rentals, you're less likely to run into legal issues or conflicts with local ordinances.
Advantages of Short-Term Rentals
More Flexibility
Short-term rentals offer greater flexibility in terms of property use. This means you can easily block off dates for personal use, make the property available seasonally, or even decide to sell without being tied to long-term lease agreements.
Bigger Profit Potential
While income from short-term rentals can be less consistent, there's often potential for higher overall profits This is especially true for properties located in popular tourist destinations or during peak seasons. You can adjust your pricing based on demand, potentially earning significantly more per night than you would with a long-term tenant.
No Lease Agreements
Short-term rentals eliminate the need for complex lease agreements and the potential headaches of breaking them. If you have a problematic guest, their stay is typically brief, and you can choose not to host them again.
Which Is Right for You?
Choosing between long-term and short-term rentals depends on various factors, including how much time you have for management, the property's location, local regulations, and financial goals.
If you have enough time to be hands-on with the management of your property, or if your home is located in an area frequented by tourists or near major attractions, short-term rentals may be more suitable.
On the other hand, if you have limited time, live far from the property, and prioritize steady income, renting out your home long-term is the better option.
READ NEXT: A Beginner's Guide To Becoming a Landlord
