March 23, 2017

What Are the Benefits of a Short-Term Vacation Rental vs. a Long-Term Rental?

When I first started acquiring investment properties, I was faced with a decision: Should I focus on short-term rentals or long-term rentals? I was already keen on the idea of short-term rentals, as I grew up in a family that owned a number of vacation homes that we would rent out on a short-term basis. But in the interest of making an informed decision, I conducted lots of research about how short-term rentals compare to long-term rentals. The degree of difference I found was quite surprising.

Defining a Short-Term Rental vs. a Long-Term Rental

It’s important to understand what falls into the realm of short-term rentals and what property types are considered long-term rentals.

Short-term rentals encompass a vast majority of vacation homes, where the rental timeframe is a matter of days or weeks. With a short-term rental, you typically have a “guest” rather than a “resident” and as such, you’re responsible for ensuring that the property is furnished, cleaned, and maintained.

Long-term rentals can include apartments, condominiums, efficiencies, or entire homes. The rental timeframe can range from a matter of months to years. Your target guest demographic can include business travelers, seasonal residents, individuals on a long-term vacation, or semi-permanent residents. With long-term rentals, you may or may not be responsible for cleaning the property and some properties may even come unfurnished.

How Does a Short-Term Rental Compare to a Long-Term Rental

When comparing long-term and short-term rentals, there are many points to consider. Your property management expenses, maintenance scope, and even your income from the property can vary dramatically.

With short-term rentals, there is generally a greater need for a property manager due to the increased number of maintenance-type tasks that you will be responsible for performing. Since short-term rental guests are typically travelers, you really need to go above and beyond what you would normally do to maintain a long-term rental property. For travelers, the emphasis is really on pampering and ensuring the guest’s comfort, whereas more permanent residents generally don’t expect this type of treatment.

For example, you would be expected to furnish and clean a short-term rental. On the other hand, long-term rentals—particularly those with guests or residents who stay for many months or even years—may come unfurnished and the residents are responsible for general cleaning tasks.

Short-term rentals do have much higher marketing and advertising costs because you’re seeking dozens of different guests to keep the property booked throughout the year, whereas long-term rentals may only see a handful (or even just one) guest over the same year-long timeframe. In fact, the vacation rental marketplace is far more competitive than the long-term/residential rental marketplace, so this is an area where a property manager’s expertise can be indispensable.

Long-term rentals, on the other hand, require a bit more investigation and vetting on your property manager’s part, as you must perform a far more in-depth investigation into more long-term guests or residents. This includes a background check, credit check, and reference check—measures that may not be required for a short-term rental.

Long-term rentals also have added property management burdens related to “troublesome” tenants, who may require a stressful and potentially costly eviction process. But with short-term rentals, there is no such burden, since most guests only stay for a matter of days or weeks. Many laws also give short-term rental property owners the right to ask a troublesome guest to leave, just as a hotel or motel would be permitted to do. Short-term rentals also do not need to adhere to the sometimes-strict regulations surrounding equal housing opportunities.

The increased marketing costs that you may see with a short-term rental property are typically offset (and then some) by the ability to charge higher rental fees. The rule with any sort of rental, whether it’s a car, a hotel room, tuxedo, or vacation home is that the shorter the rental period, the higher the per-day fee. This is good news for those who own short-term rentals, as the monthly income level is significantly higher when you’re charging by the day or week versus by the month.

Short-term rentals also have the ability to charge a seasonal premium—a practice that isn’t really possible for those who rent to full-time residents. This means that in some tourist-friendly regions, the “in-season” monthly income level from vacationers could far surpass the income level that you would see if you were renting the property on a long-term basis.

Another area where short-term vacation rentals come out on top is the owner’s ability to actually use the property. Long-term rental properties have very limited, if any, opportunity for the owners to enjoy the home. Meanwhile, you can reserve your short-term rental property whenever the desire arises in most cases.

Finding a Short-Term Rental Property Manager

There’s no one-size-fits-all solution when it comes to choosing a short-term or long-term rental model. But the benefits associated with a short-term rental model are quite clear. What’s more, a property manager can go a long way toward helping you to maximize your property’s return on investment.

If you’re seeking the perfect property manager for your vacation home, can help. Create a free profile and property managers can bid for your business. Many of the property managers we work with offer a guaranteed income model, which allows you to get a set amount of income per month. Get started today at

Lead image: paulbr75 via Pixabay

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