Owning rental properties is a great way to diversify investments. Similar to the stock market, homes come in many shapes and forms. Some people are looking for short-term rental properties while other people are looking for long-term rental properties. What are the general differences between them, and why might one person choose to own one of these properties over the other?
What Is A Long-Term Rental?
In general, long-term rental property is defined as any property that has a standard lease that is longer than 12 months. Many people think about apartments, condos, and single-family homes as long-term rental properties.
There are several reasons why people might choose a long-term rental property as one of their investment options. With longer leases, there is a consistent stream of income. There is also less to do because there is not as much turnover between residents. Property owners also have fewer responsibilities, as the renters are often responsible for handling utilities.
On the other hand, vacancies in long-term rental properties can last a long time. Some people prefer flexibility in a rental contract, so they might not be interested in a minimum 12-month lease.
What About A Short-Term Rental?
A short-term rental property is defined as any property with a standard lease that is shorter than 12 months. While this often includes vacation homes, they can also include single-family homes, apartments, and condos.
Many people like owning a short-term rental property because the income is generally higher. People tend to stay for only a few days or weeks at a time, so property owners can charge more for an average night.
One downside of owning a short-term rental property is that this requires more work. The property owner has to clean more often between residents, and there might be more variability in the income stream.
Choose The Right Property
These are just a few of the most important points people need to keep in mind regarding long-term and short-term rental properties. The right option for one person is not necessarily the right option for someone else.
Property owners need to think about their personal preferences, the location of the property, and how much work they are willing to do. That way, they can decide whether to go with a short-term or long-term rental property.
