Choosing between short- and long-term leases can be challenging when deciding to rent out a property. Read on to learn about the pros and cons of both.
In general, short-term leases are month-to-month, with some lasting up to six months. Conversely, long-term leases are anything beyond that and can go up to about 15 months. But depending on what you want to get out of your investment, you’ll want to choose wisely. To help, here are the pros and cons of short-term and long-term rentals to help you decide which is right for you.
The Pros of Short-Term Rentals
The best part about short-term rentals is how much money they can make. For example, vacation properties are usually short-term rentals, and if you invest in a property located in a vacation area, you can rent out the property for almost double what the rent would be for a long-term lease. This is because demand for these properties is higher during certain times of the year, and you have to make more money to pay for their consistent maintenance.
The Cons of Short-Term Rentals
While you can make a lot of money from short-term rentals, that money is less secure and consistent because of high-tenant turnover. This is especially true for vacation rentals, as you’re bound to see a significant drop in demand during certain times of the year. Additionally, you’ll have to maintain the property on your own or hire a professional to do it for you to keep the property clean. And you’ll have to be on your marketing game to advertise the property throughout the year.
The Pros of Long-Term Rentals
Long-term rentals make money much more consistently, as the tenant will be paying for an extended period lest they break their lease. And with lower tenant turnover, you’ll have someone occupying the property to take care of it instead of you having to maintain it all the time. Also, you can hire a property manager to take care of everyday landlord responsibilities, and with the income from a long-term lease, it pays for itself.
The Cons of Long-Term Rentals
One of the most common mistakes landlords and property managers make is not properly screening tenants before they move in. This is the only way you can avoid the biggest downside of long-term rentals– bad tenants! A bad tenant can make a long-term lease a nightmare because you’ll have to deal with them for up to a year, and you can’t just evict them without reason. And because you’re dealing with a person’s long-term living situation, many more laws and regulations go into providing a home for someone.
Which One Is Right for You?
As previously mentioned, your choice depends on what you’re trying to get out of investing in the first place. If you’re just trying to make some extra money, then a short-term rental is for you, especially if you live in a vacation spot.
If you plan to make being a landlord your full-time job or need consistent income, you’re better off with long-term rentals. This option is also better for those who are good with people because you’ll deal with many of them. Now that you know the pros and cons of short-term and long-term rentals, you’re one step closer to making the best financial decision for you and making more money!
