One day, I would like to get into real estate investing. We have a house of our own, but we live in it so we aren’t making any money from it. One debate that we are currently having is whether or not we should have a long-term rental or a short-term rental (such as a vacation rental). There are positives and negatives for both, and I will be discussing those below.
Stability can be argued against almost anything, but for the most part, a long-term rental will have more stability because the same person will be renting it for a long time. This is opposed to a short-term rental where a person may only rent for a few days, a week, or MAYBE one month.
With a long-term rental, there is less likely of a chance for the rental to be vacant because you will have a contract with a renter for usually 6 months or more.
Short-term PRO: You may be able to make more money.
You can usually charge a higher price because everything is determined per day or per week. A $2,000 a month rental for a long-term renter may make you $300 a day for a short-term renter.
Long-term PRO: Less time is needed with a long-term rental.
With a long-term rental, you won’t have to have someone check on the property as often in most cases. This is because with a short-term rental, you will need someone to clean up after each stay, someone will have to give this person the keys and show them the place each time, and so on.
Short-term PRO: If the property is not being used, you can use it.
Short-term rentals provide a lot of flexibility. If there is a vacant slot in your rental, then you may be able to use it as a vacation home for yourself as well.
Long-term CON: If you have a bad tenant, you are stuck with them.
Bad tenants seem to make up a lot of the real estate industry, or at least most people talk more about the bad than the good. If you have a bad tenant in a long-term rental, you are stuck with them for a long time.
Short-term CON: There are a lot of other vacation rentals out there.
Vacation rentals are a booming industry right now. More and more people are renting out short-term properties and their vacation homes, which means that in some areas competition can be quite stiff.
If you are interested in real estate investing, are you looking for a long-term rental or a short-term one?
Image via Flickr by kansasphoto