The Benefits and Drawbacks to Short-Term and Long-Term Renting

November 1, 2018

As a property owner, you may have struggled with the decision to rent your home as a short-term rental or long-term rental. There is much to consider, and many variables are at play. At times you may have felt one option was better than the other. And maybe you’ve already tried listing your property on a vacation rental site like Airbnb, VRBO, FlipKey, or HomeAway. If you’re still exploring your options here are some of the benefits and drawbacks to short-term vs. long-term renting.


Short-term rental benefits

a happy couple holds hands and stands behind a real estate agent who is presenting to them a short-term rental option

  • Earnings potential – Guests typically book short-term rentals for a few nights at a time. As a landlord, this means you can charge higher prices. Vacationers are willing to pay hundreds of dollars a night to stay at a hotel. Instead, they can stay in a comfortable home with many more amenities for a similar price.
  • Less wear and tear – When guests come to stay for a few days or a few weeks, they are usually there on holiday. They may not spend a lot of their time in the home because they’re out exploring. Also, short-term guests generally are mindful to keep the home as is. Not only out of respect for the homeowner, but also for the enjoyment of the next vacation renter.
  • Tax savings – If you rent your property at least 14 days during the year, you may be eligible to deduct the related expenses. Expenses can help offset rental income earned during a given year. Some of the deductible expenses include repairs, maintenance, cleaning, insurance, utilities, taxes, marketing and advertising, supplies, and others.
  • Increased flexibility – Having a short-term rental means you can block off the days you wish to occupy the home. Maybe you have an anniversary, birthday or holiday gathering coming up and choose to celebrate at your vacation home. Flexibility can be the main deciding factor between renting a property short vs. long-term.


Short-term rental drawbacks

  • Design, amenities, and ambiance should be top-notch – The success of a short-term rental is heavily dependent on favorable reviews left by past guests. With an emphasis on guest satisfaction, ensuring your home is modern, clean, and well designed is an important detail.
  • Potential gaps in rental income – There is no guarantee your rental property will have consistent occupancy. Fluctuations often occur depending on the season, holidays, events happening in your city, etc. Not being able to anticipate rental income on a short-term rental property can make choosing this option difficult for some.
  • More competition for local rentals – In the world of vacation rentals, supply is often higher than demand. As with anything else, setting your rental apart from the rest is a critical step. Offering high-end furnishings and a newer apartment or home can help keep your place competitive.
  • Management is frequent – The number of check-ins and check-outs during a given week, month, and year requires a lot of management. Cleanings, preparation of the home, correspondence with incoming guests, and arranging other details can become time-consuming and tiresome.


Long-term rental benefits

a happy couple sits at a table with a real estate agent and reviews the rental paperwork before signing

  • Consistent rental income – Many long-term leases have a rental term of 12 months. With a lease term this long, rental income is more consistent than a short-term rental.
  • Infrequent turnover – Given the length of a lease, you might only interact with a few tenants during the year. Less turnover of tenants can free up your time for other real estate investment opportunities.
  • Screen your prospective tenants – As the landlord, you’re able to screen prospective tenants. You have the option to conduct an interview, perform a background, employment, and credit check, among other due diligence procedures. With the ability to screen tenants, you have greater reassurance over the kind of people living in your rental property.  


Long-term rental drawbacks

  • Decreased flexibility – When you rent your home for a year or longer, you forfeit the option to stay there during your vacation. In this case, you must be willing to spend your days off at a hotel or other vacation rental.
  • Less control over your property – Unlike a short-term rental, with a long-term lease, you can’t check on the property often. Tenants value their privacy and space. Dropping by frequently and checking for potential damages is not something you can do with explicit reason.
  • Time-consuming to find an ideal tenant – Although you have the option to screen tenants before signing a long-term lease, the process can be overwhelming. Property owners generally don’t have a lot of free time. And bringing in a great tenant can take up a considerable amount of time.

Each rental option has several benefits and drawbacks as you’ve read. It takes careful consideration of both your personal and business needs before deciding which is best.

If you feel long-term renting is more aligned with your needs, you can list your property with Blueground. We rent the apartment from you for the long term, manage it, screen future guests, and provide all maintenance, and property management services. Most guests we screen are business professionals who stay at least one month. However, the average stay is nine months. We even offer flexible contracts in case your plans for your rental property change.  

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