Having been on both sides of the coin, we can tell you that both have their advantages. What's right for you will be based on what factors are important to you. For example: Long-term leases are less continual work whereas short-term rentals allow you to visit your property if you want throughout the year. One offers less work while the other offers more usability. Let's dive into the four major factors to consider on which option is better for you.
Long-Term vs. Short-Term Rental Analysis
Cleanliness & Maintenance:
When using your home for long-term rental, the renter is in charge of if/when they clean your home. When using your home for short-term rentals, your home is cleaned at a minimum of every other week, and is often cleaned more frequently than that. Having your home cleaned this often helps maintain the overall quality of your home, as well as helps make sure maintenance needs are upkept (i.e. wall scuffs, appliances, faucets, sinks, etc.). Homes used for long-term rentals typically endure more damage & permanent stains, making it harder to sell when that day comes.
Hours worked per week:
When running a long term rental, the number of hours you may spend per week communicating with the renter regarding their needs, issues they may have, going to the property for maintenance issues, etc. is not consistent. Some weeks it may be short conversations for things that are easily solved, and other weeks it can be major issues that require more time and attention that you are able to give. The same can be said if you are managing your own short term rental. You will have to communicate with your guests, schedule bookings and cleanings, etc. These distractions lead homeowners to consider using property management companies as they would prefer to have someone handle the daily operations. Around the U.S, industry standard for property management fees are around 20-30% with some locations charging up to 50%. When using Stay Local to host your property, our company handles all of the guest communication and relations.
Projected Monthly Income
Long-term rentals will be able to charge standard market rate, given the size and location of the home. What does that mean? Well, comps in your area will be the best determining factor in deciding what you can charge for rent. For example, a decent 1500 sqft home with 3 bed 2 bath in Sarasota, FL goes for about $3,000 per month. If trying to rent your Sarasota home with specs similar to the ones mentioned, you could expect to collect roughly that (the market rate). What we have seen is that when an entire home is used for a short term rental, it will typically bring in at least double the mortgage on the home, if not more. The reason for this is simple. Nightly rate x nights. Using the example above, the home owner could charge $150 a night (much bigger and more cost effective than a hotel) easily. So 13 nights of occupancy multiplied by $150 a night would bring in $1950 a month. And that is only at 43% occupancy! At Stay Local, our average occupancy rate for our owners is over 86%. We achieve this by customizing the pricing (charging more in peak times and less in off season) as well as creating beautiful aesthetic spaces guest want to stay in.
Usability:
Simply put, if a home is being used for long-term rentals, you will not be able to use your home at any time. If using it for a short term-rental frees up your property for use as needed. While we encourage our clients to keep their calendar as much as possible so that we are able to maximize your profits, with notice, we are able to block off dates on the calendar in order for you to use your home as needed.
Summary:
Hopefully these four major factors help you decide what option is best for your home. If you have an investment property that you do not intend to ever visit, long term leases might be the best choice for you. From our own research and experience, houses that function as vacation rentals incur less damage, maintain better cleanliness, create more flexibility to owners, make more money, and are much less work (no work), when using Stay Local Vacation Rentals.
-Nicole Jordan
Stay Local Vacation Rentals
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