If you are thinking of buying real estate for the purpose of providing a rental income there are a number of things you need to think about when you rent your property. For example, will you be renting short or long term?
Read on and you will find some key points to help you decide whether renting short or long term is for you.
Benefits of Long-term Rentals when you want to rent your property.
Renting long term generally means offering a contract of 6 months to a year, and more often attracts residential customers like students, families and couples who cannot afford or wish to get a mortgage or buy real estate.
Here are the benefits of long-term rentals
- Less work when you rent your property
- Other than collecting the rent and keeping on top of repairs, there’s not much work involved in long term renting once you have an occupant in your home. No managing check-ins and check-outs, no constant emails and calls. Just a quiet agreement between yourself and the renter.
- Stable income
Your income from long term renting is much more stable and steady; you can account for what you’re likely to have and plan ahead. If you negotiate a discounted yearly sum you might even get the full years rent upfront.
Disadvantages of Long-term Rentals
Here are the drawbacks of long term renting;
- More wear and tear on long term rentals
- Long term renters are more likely to show your property respect and take care of it, but it’s undeniably true that regular occupancy results in more wear and tear on your property and furniture. You may have to replace expensive items more often.
- You cannot use your property
- When you rent long term you lose the ability to make use of the property yourself.
- Your renters may abuse their rights as residents when you terminate the contract, and it’s much harder to get them out if they stop paying their rent.
Benefits of short-term Rentals when you want to rent your property
Short term renting means, generally speaking, renting out by the day, week, or occasionally month an appeals most often to vacationers and those on gap year. Here are some of the benefits
- Your can earn more more money when you rent your property short-term
- You can make big money in a short term if you have a property in a sought after location. If you rent by the day or week you could make more in two weeks renting short-term than you might in two months renting long term.
- Can still use your property when it suits you
- You retain use of your property for vacations and special occasions (as well as lending to family and friends). You also have more control of who stays in your property.
- Cheaper outgoings on furnishings
- Closet space, stoves, refrigerators, freezers, and washing machines are of less importance when you rent short-term as most people will see it in the same way as they do a hotel stay.
Disadvantages of short-term Rentals
Here are the downsides to renting your property short-term:
- Is more work intensive
- The money is certainly much better, but the workload increases proportionally some would say. If you do not live close by it can be hard to manage your schedule, ensure check ins and check outs don’t clash or overlap, and prepare the property for each new guest. You may need to spend some of that extra profit on a property manager.
- Less respect for your home
- Short-term renters are also less likely to treat your property with respect and care which means you could be replacing items more frequently due to breakage, loss, or even theft. Tracking what gets damaged when is much harder when you rent short term.