For many landlords and property managers, the ideal scenario is to sign desirable candidates to long-term leases. After all, reliable renters and a steady revenue stream tend to add up to rental property success.
Yet the new reality is that short-term leasing is becoming more common in the rental market. If your property is located in a prime spot for tourists or businesses, it’s quite possible that you’ll attract renters looking for short-term lease options. And that could be a boon for your business.
Leasing: The Long and the Short (Term) of It
Whether or not your property is suited to short-term rentals depends on a variety of factors, including the type of property, its location, and how well you manage and maintain it. The property has to appeal to people looking for weekly or monthly rentals, such as business travellers or vacationers who don’t want to stay in hotels. And it must be located in a zone that allows short-term leasing; you don’t want to go against the rules and regulations set out by condo boards and municipalities.
Once you’ve done the research and have decided that your property is a good fit for short-term rentals, it’s important to consider whether short-term tenants are a fit for your business.
Pros
Higher Rent
Rates for short-term accommodations are almost always much higher than those for long-term leases. Rentals that are located in popular tourist destinations often bring landlords a lot more per week than their traditional rentals do, especially during special events.
Greater Flexibility
With short-term arrangements, landlords have more freedom to sell or occupy their rental property. For example, month-to-month leases often require as little as 30 days of notice to terminate. And it works both ways; tenants on short-term job postings or who are shopping around for a home might prefer a monthly commitment over an annual lease.
Increased Freedom for Rental Adjustments
Annual leases might bring greater predictability for property owners, but they also mean you can’t adjust rental rates as frequently or by as much. With a shorter-term lease, there’s greater opportunity to increase rent–in accordance with local or provincial laws, of course.
More Control
Long-term renters often view the property as their own, particularly if they’ve lived there for several years. Some tenants even make changes to the unit without getting permission – in particular, unwanted changes that might go unnoticed for months or sometimes years. Short-term rentals give you increased access to the property, as you’ll be able to plan more frequent inspections and maintenance work between tenant stays.
Cons
Increased Maintenance
While the rental rates are usually higher, so are the maintenance costs associated with short-term rental properties. With more people coming and going through your property, you’ll have to organize cleaning more often. And there could well be hidden costs that are harder to predict. Tenants who are only staying a short while tend to show less care for rental spaces, so you might have to sink more money into repairs and replacements than you would with long-term rentals.
Higher Tenant Recruitment Costs
The more frequently you turn the property over to new tenants, the more time you’ll have to spend showing the unit and screening tenants. You’ll also have to invest more money on marketing, to minimize vacancy and attract the kind of people you want staying on the premises.
Greater Risk
When you’re frequently looking for short-term renters, you’ll have less time to conduct background checks and follow up with references for each applicant. That leaves more room for undesirable tenants to make their way onto your property – for example, people who don’t pay their rent, either in full or at all, or who are careless with your space.
Bigger Gaps
Keeping a short-term rental fully leased throughout the year can be difficult. It’s very likely that you will have gaps between tenants. Are you making enough during the rental period to cover these dry spells?
How Property Vista Helps
From automated marketing to automated leasing, Property Vista can help you manage your short-term rentals more easily and efficiently. We’re here to help streamline your property business with tools to accept online payments, keep accurate digital records and screen your potential tenants. See pricing and get a demo.
