As with most things in life, a list of both pros and cons can be compiled concerning the ownership of both long-term and short-term rental properties. The recent shift in the hospitality industry toward short-term rentals versus the traditional hotel vacation stay finds many investors intrigued by the possibilities and potential of this growing market. But let’s hope this doesn’t happen before a thorough investigation into the advantages and disadvantages of both short-term and long-term rental properties.  

Short-term pros 

The potential profit

• The nature of short–term, hotel-type stays at per-night rates are much higher than a long-term monthly rent. A fluctuating nightly rate that increases during times of high demand, holidays, or special events can pad the bottom line.  

The perk of no long-term lease 

• The flexibility regarding whom and when to rent is yours alone. Block off the days, weekends, or weeks you might want to use a home purchased in your family’s favorite vacation setting. Enjoy amazing vacations two, four, or six weeks a year and make money on the property throughout the rest of the year.   

Less wear-and-tear on the property 

• Many folks find it surprising that, for a variety of reasons, short-term rentals tend to result in less wear and tear on the property. Vacationers often spend more time on the go than being in the home, condo, or apartment. The frequency of a cleaning crew on the premises allows minor repairs to be made before escalating into a major expense. The keen eyes and detailed cleaning processes of experienced staff can be a tremendous advantage to the property owner who retains control over preventative and routine maintenance.  

Pricing flexibility 

• In addition to the higher income potential, owners of short-term rentals have the additional luxury of adjusting pricing as they see fit. For example, if inventory is filling up quickly, an owner can raise the rent to maximize profits. 

 Long-term pros 

Steady income 

• While the per/night rates will be lower than short-term rentals, a long-term rental has much more consistent day-to-day, week-to-week, month-to-month income. For example, if a short-term rental is double the nightly rate but is empty during the off-season and not always full in-season, the consistent income from a long-term rental can suddenly be very appealing. 

Utilities 

• While a portion of your short-term rental income will go toward paying utilities, the tenant is responsible for utilities in most long-term rentals. 

Less property management cost/time 

• Long-term rentals require less marketing, ongoing maintenance, and much less tenant turnover, which adds to less property management. The market rate for short-term property management can be double the market rate for long-term. If you choose to manage the property yourself, long-term rentals take far less time. 

Shorter maintenance and purchasing list 

• Long-term tenants are responsible for cleaning and often take care of minor maintenance items. They also bring in their furnishings, stock their kitchens, and purchase their ongoing consumable needs, such as toilet paper. (All of which is your responsibility with short-term rentals) 

Short-term cons:  

Higher cost to maintain 

• A disadvantage to the oft-repeated process of arrivals and departures is that the home, condo, or apartment will require frequent, thorough cleaning. While property owners can perform these tasks themselves, often they choose to hire an individual or agency to take care of this necessary aspect of property rental.  

Specific restrictions typically govern it 

• Some cities have enacted regulations that apply different restrictions to short-term rentals than to lease-driven long-term rental agreements. Some of these restrictions may include limiting the number of short-term rentals in a vicinity, requiring a costly transient license, and/or paying a registration fee to the city. It’s the landlord’s responsibility to be aware of and follow all laws that pertain to the community, county, and state where the rental unit is located.  

Requires a more time-intensive approach  

• The short-term furnished unit requires more time to maintain than a long-term rental. The restocking of supplies, the laundering of linens and towels, the frequent cleaning, as well as the booking inquiries and reservation management, can become a time-intensive process.   

Long-term cons: 

Higher potential for damage 

• A long-term rental is a home for your tenants. They ‘use’ the property much more extensively and spend more time in it – hence the potential for more damage. There is also more wear and tear in general than a short-term rental.  

Dealing with evictions 

• If you end up in a challenging tenant situation, it will not be resolved quickly. It will require the eviction process, which can be time-consuming and sometimes a loss of income. 

Pursuing success and profitability in rental properties requires an honest evaluation of both the pros and the cons – whether choosing long-term or short-term. 

About Rentals America 

Rentals America provides full-service property management for residential rental properties. Our team is completely dedicated to property management and we’re here to help landlords navigate the rental market.