When you decide to invest in a vacation rental property, you’ll find yourself stepping into an exciting professional marketplace and world of possibilities. That said, before you begin listing your rental out to guests, you’ll need to decide whether or not you’re going to make your investment a short-term rental property, or a long-term rental option for tenants. There are a variety of factors to consider before making the leap in either direction, and the following are some upsides and downsides of both decisions to help you make the best financial choice to reach your business goals.
Vacation Rentals vs Long-Term Rentals
Many property owners who decide to focus on growing their short-term vacation rental business do so for the financial flexibility this option provides. In general, short-term rentals that see higher turnover for more guests across a calendar year enjoy higher cash flow potential. This is often due to strategic marketing on the part of a property management team that is able to get the word out to a wide audience of prospective guests year-round on high-traffic platforms like VRBO, Airbnb, Booking.com, and many more!
A short-term vacation rental comes with options for property owners to utilize the rental for themselves for a relaxing weekend when it’s not occupied by guests. Because there are many short gaps between guest stays throughout the year, a regular maintenance and upgrade schedule is refreshingly easy to put in place for the property, ensuring appliances and the overall integrity of the home remain intact year-round.
Additionally, many property owners prefer short stay rental options because it’s a path that typically leads to fewer legal disputes than are encountered with long stay tenants. In a short-term rental, guests are staying for just a brief period of time, and any issues that potentially arise can be dealt with right away while changes, upgrades, and property improvements can be made relatively easily in between guest reservations, effectively avoiding further problems later on.
Downsides of Short-Term Vacation Rentals
For some prospective property owners, the downsides of owning a short-term rental property revolve around fears that they won’t be able to maintain the occupancy rates they want to achieve year-round. This can be especially stressful for those who have specific profit goals in place but are attempting to manage their short-term rental without the help of a professional property management team. When you invest in a short-term rental in a seasonal marketplace, it’s extremely important to have marketing platforms established upfront so you can keep guest reservations consistent despite travel season fluctuations. If you’re unable to do this on your own, you could see a drastic drop in revenue at certain times of the year. The result can be the same when you invest in a short stay vacation rental in an area that’s popular year-round. In this case, you’ll be competing directly with plenty of other appealing properties in the area and unless you have a property management team helping your home stand out in the marketplace, you could quickly fall behind on your overall return on investment.
Another factor to consider when investing in a short stay vacation rental is the overall wear and tear that the property will go through. Without a property management team helping you maintain a regular maintenance and housekeeping schedule, you’ll be responsible for checking in on potential problem areas from time to time and it’s easy to overlook small issues that could become costly repairs down the road.
Upsides of a Long-Term Rental
For property owners who decide to invest in a long-term vacation rental, the choice might come down to their comfort level in knowing they have long-term income in place. A long-term stay often comes with an extensive lease that can span months or multiple years depending on the contract. The commitment can bring with it a sense of security that there will be rental payments coming in despite a fluctuating travel season and market. These reduced vacancy periods can be appealing to those who are new to the rental market and looking for stability to get started.
Downsides of Long-Term Rental Options
The downside of owning a long-term rental begins with the fact that if you’re looking to double your investment as a vacation home for yourself from time to time, there will be very little to almost no chance to do so. Many long-term renters view the property as their long-term home, making it difficult for owners to utilize the property for leisure in between tenants. Additionally, it’s important to remember that even with a long-term contract in place, you always run the risk of having your tenants not pay up on their rent in a timely manner. This can cause income disruptions that are hard to overcome and could result in significant added costs and expenses due to legal action having to be taken over time to resolve those problems. In the event you end up with problematic tenants, a long-term rental means you’re going to have to deal with those issues for a longer period than you would if you have a disruptive short-term tenant.
Making the Choice That Suits Your Style and Goals
Ultimately, the decision to choose between a short-term vacation rental and a long-term rental is a personal one that takes your business and profit goals into account as well as your personal preferences. In either case, teaming up with a professional property management team like ours at Dune Vacation Rentals is a sure way to streamline your business and enjoy the peace of mind that comes from knowing you have experienced hospitality professionals on your side. While we make sure you have everything you need in place to be successful, you can focus on the aspects of the industry you truly love. We’re here to handle questions as well as your home care, guest services, marketing, and more. Whether you’re looking to transition your existing vacation rental to the next level of success or you’re excited to step into the vacation rental industry for the first time, we’re here to help. Reach out today to learn more about our comprehensive service and property management options available!
