Have you been grinding long enough to scrape together a down payment for a rental property? If so, you might be looking for someone who can help sell my house fast. That way, you’ve got the liquidity to purchase something. However, once you’ve got the money, which type of property should you buy? Long term and short term rentals each have their benefits. Which is the best depends on your circumstances.
What’s the Difference Between Short and Long Term Rentals?
First, let’s define our terms. Long-term rentals would be anything that has a lease of 7 months or longer. Less than that would be considered a short-term rental.
Long Term Rentals Have Longer Leases and Experience Less Turnover
Leases on long-term rentals can range in length, up to multiple years in some instances. For the most part, people seem to stick with a standard 12-month lease. That way, you’ll never have to worry about your property sitting vacant. Plus, as long as you screen applicants properly, cash flows ought to remain steady.
Short-Term Rentals Earn More Per Night, But They’ll Have More Vacancies
Sometimes, investors like maximizing their earning potential. Short-term rental rates are a lot higher than what you’d find on a comparable long-term lease. Anyone looking for the highest earning potential possible ought to take a look at them.
Why Would You Rather Rent Something Short Term?
Sure, renting something long-term might be a bit less work upfront. However, in the long run, would it be a better option? Rentals depend on their regional market to a greater degree than other real estate investments. Some areas might be primed for longer-term rentals, while in other areas things could be the exact opposite.
Benefits of a Short Term Rental
- Potential for Higher Cash Flow:
Above all, a short-term rental’s primary benefit would be its higher rates. As long as you can rent the place, it’ll earn more.
- You’ll Still Have Use of the Property:
Additionally, if you’d like to have access to the property, short-term rentals permit this. Just let the property become vacant, and then you can use it as you’d please.
- No Worrying About Problem Tenants:
Not every tenant is trustworthy, unfortunately. By renting properties short-term, anyone who causes problems won’t be causing them for long. That’s why we’d rather stick to shorter terms. Problem tenants become such a hassle once they’ve signed a long-term lease.
What Are the Benefits of Long Term Rentals
Of course, it’s not as if long-term rentals lack their benefits. Anyone who’d rather rent something then forget about it might want to consider them. Your maximum cash flow could be capped compared to short-term rentals. Still, for stability, a small deduction may be worthwhile.
Long Term Rental Benefits
- Steadier Source of Income:
Finding a tenant ought to be the most stressful part of the whole process. Once you find someone solid, the rental income should roll in monthly. Such a steady source of income provides some sweet peace of mind.
- Sign and Forget:
Not worrying about how you’ll find new tenants seems like it could be pretty nice. Short-term renters might pay more. However, once you find someone long-term, they’ll hardly give you any issues.
- Won’t Have to Keep Screening Applicants:
Screening your applicants ought to be your chief concern, as those determine how easy everything will be. Better tenants start with better screening.
How Much Work Is Managing Your Rental?
Topping off your concerns, thoughts of maintenance might seem intimidating. Yet, as long as you’ve got a plan, it won’t be anything you can’t handle. Long-term and short-term rentals have differences. So your approach should vary.
Short Term Rentals Need More Frequent, Albeit Less Strenuous, Maintenance
Each time someone rents short-term, the place will have to be cleaned once they leave. Relying on them to clean up after themselves is just asking for a bad review. Eventually, someone will take advantage of such hospitality. Then, you’ll be sorry that it happened. Fortunately, even though maintenance is more frequent, it tends to be minimal.
Long Term Rentals Tend to Need Attention Less Often
You’ll hardly hear about your long-term rental. However, when your tenant calls, it’ll probably be something major. For example, one of the pipes underneath the home may have burst, spilling water everywhere. You’d have to send someone over ASAP if that happened.
How much you plan will impact how easy everything is. Planning for all possibilities is just best practice. Before you make any decisions, research your local area. It’s even better if you’ve got experience living there yourself.
Certain areas might present better short-term opportunities, such as high-traffic tourist destinations. Vacancies shouldn’t be as much of an issue in those places, even with a short-term rental.
On the other hand, if finding renters is tough, locking them into longer-term leases would be a better strategy. That way, once you’ve found someone reliable, you won’t have to spend a ton of time searching for their replacement.
Managing Your Rental Portfolio
Regardless of which type of property you’d rather manage, the strategy will be crucial. Without one, you’d probably never have gotten here in the first place. Comparing how different investors have been performing in your area can be helpful. Learn from their successes and mistakes. That way, you can avoid the most costly problems while capitalizing on easy wins. After a little while, you’ll get the hang of things. Most landlords do.
This essay should have taught you something new and beneficial. You’ll find a lot more ideas on this page: How To Create A Profitable Rental Property
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