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Blog: Short-Term vs. Long-Term Property Rental

If you had the opportunity to increase the income from your rental property by double or even triple percentage points, would you jump on it? Most property owners and managers would—hence the boom in short-term rental offerings across the country. 

Renting a house or apartment to tourists and vacationers for the night or week instead of the traditional yearlong lease given to local residents can appear to be very lucrative. Online listing services such as Airbnb and Homeaway.com make it look easy. But is it the best choice for you?

Short or long: What’s your style? 

Before jumping on the short-term rental bandwagon, it makes sense to look at the pros and cons. It’s true that you can charge a lot more by renting short-term; however, it’s a different business model that suits some managers and locations better than others. Here are a few factors to consider:

•    How intensively do you want to manage? Aside from exterior maintenance, the bulk of the work associated with property management occurs when tenants turn over. With short-term rentals, you have a lot more of that. You will also need to be on top of your marketing and advertising because you’ll need a constant stream of new tenants. Some landlords are more than willing to forgo the higher rates rather than have to deal with constant turnover. However, others welcome the opportunity to inspect the property frequently and address minor issues before they become major ones, without relying on tenants to inform them that something needs fixing. 

•    What are the costs involved? Short-term tenants require that you provide a lot more in the way of amenities than long-term tenants do. Utilities are a given, including TV and wireless if you want to stay competitive. Many successful short-term property managers like to throw in enticing goodies such as groceries in the fridge. Don’t forget the toilet paper! Beyond the apartment itself, you’ll also want to consult with your insurance agent and/or accountant about how renting short-term may impact your taxes and insurance. 

•    How will it affect your property? Keep in mind that rapid tenant turnover associated with renting by the night or week can take its toll on your property. Even normal wear and tear becomes more urgent because first impressions are so important. Expect to perform routine upgrades like painting much more frequently than you would with a long-term rental property. This, of course, is yet another thing that impacts your cost of operation. On the other hand, you won’t experience the damage tenants cause when moving large pieces of furniture in and out. Finally, be aware that some people use short-term rentals as a party house, which can lead to untold damage and ill will from the neighbors. 

•    What will be the impact on your community? Speaking of neighbors, in some areas of the country the proliferation of short-term rental units has caused community uproar. For example, at a recent city council meeting in Anaheim, California, residents complained that short-term rentals were attracting undesirable tenants who were engaging in loud parties and other undesirable behavior. In some areas, short-term rentals are blamed for driving overall rent prices up. Hotel owners in some cities are becoming upset about unfair competition. However, not every impact is negative. Some communities benefit from the increased economic activity, and visitors can often introduce healthy diversity into a neighborhood. 

•    What does your competition look like? The same online opportunities that make short-term rentals such a viable option also mean you are likely to face plenty of competition. It pays to do your due diligence and find out—to the best of your ability—the volume of visitors your area attracts, as well as the other lodging options that are available to them before making the commitment to turn your property into a short-term rental. 

•    Which restrictions or regulations will you need to comply with? If your community doesn’t have laws concerning short-term home-leasing yet, it probably will soon. They may be different than those governing traditional rental properties, so be prepared. Rentals in neighborhoods with a homeowner’s association might also be subject to regulation from that community. Be sure to register your property if you are required to do so. 

Property owners and managers should be aware that fees typically are substantially higher for managing short-term rental property. This cost reflects the greater effort it takes to keep them occupied and properly maintained. 

“One of the things I’d say is that no matter what you decide to do with your rental, it’s very important to keep the owner of the property in the loop; and if you’re the owner, keep your community in the loop,” says Chuck Hattemer, co-founder of OneRent, a property management company serving Seattle and the Bay Area. “If you manage a short-term rental, be very transparent about how much you’re charging, and who’s moving in and out.”

Some aspects are the same regardless of the length of the lease. Tenant screening remains vital. Whether you are renting the property to somebody for a night or a year, doing a quick credit and background check will go a long way toward securing a positive outcome for all parties. 


Anne Michelsen is a freelance writer with expertise in areas including construction, small business management and sustainability (www.thegreeninkwell.com).

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