Long Term vs Short Term Rental: What Is the Difference?

This dilemma of choosing either long term rentals or short term rentals may leave you at a crossroads as a landlord.

Although both of them have their share of distinctive difficulties and benefits, the decision actually hinges on the type of property, location, personal interests, and local market environment.

Here, we are going to discuss the differences of the two approaches to renting, providing information that can guide the property owners in making the right choices.

Difference between Long term and Short term Rentals

What is considered a short term rental? Short term rentals are leased on a short term basis, ranging between a few days and a few weeks. In most regions, rented-out properties with a 30 day period are legally considered as short term rentals.

They are usually handled through websites such as Airbnb and Booking.com to assist tourists and traveling lovers in finding affordable, flexible, and home-like lodging.

What is considered a long term rental? Long term rentals normally entail lease agreements of one or two years. There are provisions regarding rent enhancement, maintenance, obligation, and period of lease in long term rentals.

These are essentially beneficial for landlords, as they provide steady rental income and fewer turnovers. They are used for living for an extended time, whereas short term rentals are frequently connected with vacation homes or properties in tourist-friendly locations.

The Appeal and Dynamics of Short Term Rentals

Short term rentals have the potential for higher income and offer flexibility. When you rent long term, you have a fixed rent for the time of rental, while short term rentals allow you to adjust rents dynamically according to demand.

Homeowners can demand premium nightly rates in the summers, peak travel seasons, religious holidays, and special events.

For example, a beachfront home may generate several times the income it would as a short term rental during prime vacation months.

If you have ambition in the rental industry or own multiple properties in the rental industry, running a short term rental portfolio can blossom into a vacation rental management business.

If you don't own multiple properties, you can run them for others; it will help you build a portfolio, and you can use that later on in the vacation rental management business.

It can also bring commissions that will diversify income streams, while software platforms streamline operations. With advanced technologies, landlords can maintain effective guest communication, avoid conflicts, optimize pricing strategies, and arrange cleaning schedules.

Short term rentals are a dynamic business. It incorporates daily improvements, continuous marketing, guest coordination, and frequent property upkeep between stays.

High turnover means increased cleaning and maintenance costs. Additionally, rental income is often seasonal, changing constantly with tourism trends and economic cycles.

When it is in use, it is easy to manage, but when it's not, like during off-peak months, you will need to plan financial aspects carefully.

Another significant consideration is regulatory risk. Many cities have introduced their zoning laws and licensing requirements for protection. Some of them have even outright banned short term rentals.

Even though these laws were made for compliance, noise, safety, and neighborhood impacts. In order to avoid fines and unnecessary disruptions, the property owners are required to stay informed and adaptable.

Advantages and Challenges of Long Term Rentals

In comparison to short term rentals, long term rentals provide steady and predictable income. A good and reliable tenant guarantees monthly payments and also reduces the risk of vacancy.

This consistency helps financial planning and often equates to a more passive type of property investment.

While short term rentals have their own perks, long term rentals are generally easier and have lower risk compared to vacation rentals. They also need fewer initial outlays since tenants bring their own furniture.

However, long term tenants tend to cause more wear and tear, as they treat the rental as their home. Additionally, if you unfortunately come across difficult tenants, it will be difficult to evict them because it is time-consuming and legally complex, and because tenant protection often favors renters.

One more drawback of long term rentals is that the rent is fixed for the duration of the lease. For example, you got a tenant in January, and in June, the rental prices surged; now you can't increase the rent midseason.

You will need to wait till the end of the lease, and if the tenants renew their lease, then you can only increase the rent.

Furthermore, landlords who sacrifice their property for long term tenants often lose easy access for personal use. For those owning vacation homes, this trade-off can be significant.

Key Factors to Consider in Choosing a Rental Strategy

As a landlord, it is essential for you to know the long term rental definition, the difference between them, and these aspects to make a well-informed decision.

Property location and type: If your property is located at a vibrant tourist spot with famous landmarks, it is a perfect fit for short term rentals. Conversely, properties in residential neighborhoods are better suited for long term leasing.

Income Goals: Short term rentals have much more potential for higher returns, albeit with greater income variability; long term rentals provide steady cash flow, albeit with lower income.

Time and Management: Long term rentals are less time-intensive. Short term rentals need more effort and incur costs for property managers.

Legal and Regulatory Environment: To prevent compliance issues, investigate local laws regarding short term and long term tenants.

Personal Use: If you plan to use your property intermittently, short term tenants offer flexibility, while you can’t use the property for personal use if you have long term tenants.

Pros and Cons Snapshot

High flexibility for the owner and guests

Maximizing Rental Success

In order to maximize rental success, you should invest in a professional property management system, guest communication platforms, marketing, third-party cleaning services, automated pricing tools, and booking apps to help optimize occupancy and maintain property quality.

Conclusion

This article balances both sides, but ultimately, it is up to you and your situation, market potential, and investment objectives.

Short term rentals provide flexibility and high-income potential and require increased commitment and regulatory challenges. The long term rentals, on the other hand, provide financial stability and ease with a reduced income.

Well, there is one way to ensure that you reap the best out of your property; it is both short- and long term renting.

You lease your house on a holiday basis and lease it on a long term basis when the seasons are not as busy.

Concisely, both strategies require a prudent approach to market research, objectivity, and smooth management.

We can assist you in maximizing the rental opportunity provided, find long term rentals in Florida

as well as manage your properties.

With Mosaic Services, we can help you maximize the benefits of the rental opportunities while managing your properties.