Choosing between renting a property on a temporary or long-term basis can be a difficult decision for landlords. Both types of rentals offer unique benefits and challenges, so it's critical to understand the key differences before making a decision. Below, we've provided a comprehensive analysis of both types to help you determine which may be the best option to maximize income and meet your expectations as a landlord.
1. Definition and Duration of Lease
Temporary Rental:
Short-term rental is a type of rental that allows a property to be rented for short periods of time, usually days, weeks or months. It is common in tourist areas or urban areas with high demand for short-term rentals, such as business centers or universities.
Long Term Rental:
Long-term rentals, on the other hand, refer to contracts of extended duration, typically of one year or more. This type of rental is ideal for tenants looking for a stable residence, such as families or people who work in the area permanently.
Which owner is it suitable for?
Short-term rentals are ideal for landlords who want flexibility and are willing to put in the time for ongoing property management. On the other hand, long-term rentals are a good option for those seeking income stability and don't want to deal with a high turnover of tenants.
2. Profitability and Prices
Temporary Rental:
Due to the short duration of the contracts, landlords often charge higher daily or weekly rates. This means that in peak seasons or tourist areas, income can be significantly higher compared to long-term rentals. However, profitability depends on occupancy – if the property does not have constant occupancy, income can fluctuate.
Long Term Rental:
Long-term rentals offer stable and predictable income over the life of the contract, making financial planning easier. Although the monthly rate is generally lower than the daily rate of a short-term rental, the stability and continuity of income make it attractive.
Which owner is it suitable for?
If the priority is to maximize income during peak seasons and the property is in an area with high demand from tourists or professionals, temporary rental may be ideal. On the other hand, if the goal is to obtain stable income and reduce risks, long-term rental is a better option.
3. Maintenance and Administration Costs
Temporary Rental:
Short-term rentals require a higher investment in maintenance and administration. Costs include frequent cleaning services, laundry fees, and property maintenance after each stay. Additionally, property owners may have to constantly manage reservations, check-ins, check-outs, and customer service.
Long Term Rental:
With a long-term rental, maintenance costs are usually lower, as repairs and general maintenance are not as frequent as with a temporary rental. Management is also simpler, as only the initial contract management and monthly rent collection are required.
Which owner is it suitable for?
Short-term rentals are best suited for landlords willing to invest time and resources into actively managing the property. Long-term rentals, on the other hand, are ideal for those who prefer simpler management and less intervention on a day-to-day basis.
4. Tenant Profile and Relationship with the Landlord
Temporary Rental:
Temporary tenants are often tourists, business travelers, students, or individuals moving house. This means that the relationship between landlord and tenant is more transient and often business-like.
Long Term Rental:
Long-term tenants are often people looking for stable housing and may be interested in building a long-term relationship with the landlord. This tends to create a bond of greater commitment and facilitates more fluid and trusting communication.
Which owner is it suitable for?
If you prefer a long-term relationship with your tenant, long-term rentals will be a better option. However, if you prefer frequent tenant turnover without the need for a personal relationship, short-term rentals may be more suitable.
5. Flexibility and Control over Property
Temporary Rental:
Short-term rentals offer greater flexibility for the owner, allowing the property to be reclaimed between stays for personal use or changes to rental conditions based on demand. Additionally, owners can decide to close availability for specific periods if they wish to enjoy the property for personal use.
Long Term Rental:
In a long-term lease, the owner agrees to rent the property for an extended period, meaning that he or she will not be able to use it until the end of the lease. This reduces flexibility, but increases stability in terms of occupancy and profits.
Which owner is it suitable for?
Short-term rentals are ideal for those who want flexibility and the ability to use the property at certain times of the year. Long-term rentals, on the other hand, are suitable for owners who do not need to access the property in the short term.
6. Regulation and Legal Aspects
Temporary Rental:
Temporary rentals are often subject to specific regulations, especially in urban and tourist areas where governments impose restrictions to protect local housing and prevent tourist overexploitation. Depending on the city, special licenses and compliance with certain rules may be required.
Long Term Rental:
Long-term rentals are regulated by residential rental laws, which usually offer greater protections for both the tenant and the landlord. Long-term contracts must comply with certain legal standards, but in general, the requirements are simpler compared to short-term rentals.
Which owner is it suitable for?
If you'd rather avoid complex regulations and licensing processes, long-term rentals may be a simpler option. Temporary rentals may be viable if you're willing to comply with local regulations and have experience managing short-term rentals.
7. Advantages and Disadvantages of Each Modality
Aspect Temporary Rental Long Term Rental
Higher revenues during peak seasons Stable and predictable year-round
Flexibility High: allows you to recover the property between reservations Low: the contract commits the property for months or years
Maintenance Costs High, including frequent cleaning Low, regular and occasional maintenance
Management Requires greater administrative effort Simple, occasional contract management
Regulations Often subject to local restrictions Governed by standard leasing laws
Conclusion: Which Rental Method is Best for You?
Both short-term and long-term rentals have their advantages and challenges. When deciding between the two, it is important to evaluate your financial goals, your availability to manage the property, and the profile of tenants you prefer.
•If you value flexibility and are willing to invest time in active management, short-term rentals can be an excellent option, especially in tourist or high-demand areas.
•If you prefer income stability and simpler management, long-term rentals offer the security and peace of mind you need for a long-lasting relationship with your tenant.
Ultimately, understanding the key differences between both types of rentals will allow you to make an informed decision and get the most out of your real estate investment.
