Investing in an additional property other than your place of living gives you opportunities for earning passive income. As a rental owner, there are two ways to go: short-term or long-term rentals. Both have advantages and disadvantages – keep reading to learn more about them and then choose which is better for you. What will also affect your decision is your lifestyle and preferences.
When it comes to short-term rentals, there are a few plausible benefits. They include the possibility of higher profit, flexibility and the ability to use it yourself. On the other hand, drawbacks of short-term rentals include being on call, cleaning the property constantly and the necessity to invest in marketing. As far as long-term rentals are concerned, the benefits include guaranteed profit, peace of mind and invested tenants. Conversely, the drawbacks are contract lock-in, lack of control and risk of damage. Carefully consider all the benefits and drawbacks before making the final decision – don’t forget to consider your lifestyle and preferences. Whichever option you choose, you will need to advertise your property to connect with potential tenants. As a landlord, you have several options, including uploading your ad onto a platform like renthero.co.uk.
Short-term rental: Benefits
According to statistics renting out a property for the short term can bring you up to even 60% higher profit. Some estimations even suggest that a long-term property that earns £1000 is able to earn up to three times more by being sublet short term. You can check out current nightly prices on platforms such as Airbnb.
The next big benefit includes flexibility. Subletting your short-term rental enables you to be more in control of it. You decide when and for how long the property is available for rent.
Another benefit is the possibility of using the rental for your own purposes. If your rental is located in a popular vacation area, you can rent it out throughout the whole year, except for two weeks in high season when you and your family can use it. For example, one such place is Mornington in Victoria, Australia. It is a popular coastal holiday destination. You can list it with one of the best Mornington real estate agents and start making a profit from it.
Short-term rental: Drawbacks
Being on call
When it comes to short-term rentals and their drawbacks – the biggest drawback is being on call. You need to be available to meet guests and respond to inquiries 24/7.
Having new guests every week means a lot of cleaning, dusting and vacuuming. Also, there will be bedding and linens for washing. You can do all of these things yourself if you don’t mind these regular household chores. And if you don’t have time for that, you can always hire somebody to do it for you. You can charge a cleaning fee to cover your costs.
Investing in marketing
Short-term rentals imply a large turnover of guests, so you need marketing to promote your rental to new customers. You should keep your listing visible on appropriate platforms as well as use diverse online marketing and social media tools at your disposal.
Long-term rental: Benefits
When it comes to long-term rentals and their benefits, the first one is guaranteed income, which isn’t the case with short-term rentals. Even though the rates are higher in short-term rentals, you have a guaranteed income locked in the contract when renting long-term.
Peace of mind
Another crucial benefit is peace of mind, which is priceless. With long-term tenants, you don’t have to think about promoting your property. Moreover, you can relax knowing the fact that your property is occupied for a certain period. Less effort is needed from you as the property owner.
When you have long-term tenants occupying your property, they tend to be much more invested when it comes to taking care of the property. As they will be living there for some time, they often do their best to maintain it properly.
Long-term rental: Drawbacks
As far as the drawbacks of long-term rentals are concerned, the first one that comes to mind is contract lock-in. Once you sign that contract, you can’t make changes without legal consequences, even though there has been some major turnover in your life. So, it’s not always ideal. There is definitely a lack of flexibility.
Lack of control
Another drawback is the lack of control. Having long-term tenants means that you are not allowed to visit the place uninvited. You leave caring for the property in their hands.
Risk of damage
Lastly, renting out long-term and the inability to visit the property whenever you like for a checkup also means a potential risk of damage. Tenants can create wear and tear on appliances, walls and flooring. You should include a damage clause in the contract and collect a deposit to protect yourself.
Both rental options have their benefits and drawbacks, so you should consider which alternative is better for you.