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    Long Term vs Short Term Property Rentals: Which Has Better Returns?

    • August 11, 2016

    If you are wondering whether it’s best to consider long term or short term property rentals as an investment, you may find yourself trying to weigh up a great number of pros and cons. The reality is that both offer returns to some degree. While long term rentals can be a great way to bring in steady income month after month, short term lets have the potential at a far greater return – especially if your property is in a sought-after area.

    Long Term vs Short Term Property Rentals

    To help you work out which option is best for your needs, let’s look at a side by side comparison of each of these rental property investment strategies.

    Long Term Property Rentals

    Some of the primary advantages of renting your property out on a long-term lease include the following:

    • Monthly rental payments from tenants, paid by a specified date each and every month. This is great for those who require a constant, reliable return.
    • Monthly utility costs such as rates, water, refuse and electricity can be included in rental packages or charged to tenants.
    • Properties can often be rented unfurnished, which means no additional costs required to furnish the apartment.

    On the downside, some disadvantages of a long term approach include a lack of flexibility at when you can use your property, as long term leases typically last a minimum of six months to a year. There is also a lot more paperwork involved, from the drawing up of rental agreements to notice terms, eviction policies, late or non-payment of rents and tenant obligations. There is also a lower income ceiling, as rental prices are often based on area trends.

    Short Term Property Rentals

    Some advantages offered by short term rental properties include the following:

    • Rates are governed by a number of factors, from property grading to area, season, number of bedrooms, facilities and overall quality of property. This can have a dramatic effect on rental income potential – particularly for well-maintained properties based in sought-after areas.
    • There is a lot more flexibility for property owners, as bookings and occupancy can be managed carefully. This means that owners can make use of their property during off-season without having to deal with tenants.
    • The entire booking, management and promotion aspect of holiday lets can be outsourced to a vacation rental specialist, which means little to no effort on the part of property owners.

    In order for properties to achieve maximum occupancy all-year around, they need to first be prepared and then be maintained. This means an initial investment in furnishing the apartment, as well as on-going investments to ensure that guest needs are continually met. Achieving a high tourism grading can make all the difference in property value. Working with a vacation rental specialist can also make a major difference in income potential.

    Totalstay offers a bespoke property rental solution for owners of villas, apartments and apartment complexes. To learn more about our unique approach to short term rentals, contact us today and let us know how we can turn your property into a world-class investment.