Vacation Rental Vs. Long-Term Rental: Which One Is More Beneficial

Vacation Rental Vs. Long-Term Rental: Which One Is More Beneficial
Vacation Rental Vs. Long-Term Rental: Which One Is More Beneficial
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Are you planning to start your own property rental business? Then decide on the business format since long-term and short-term leases have many differences. In many ways, the type of rental determines the location. For example, people usually come to a resort for a few days or weeks, and in large urban cities, many live in rented apartments permanently.

Of course, there are many other factors to consider as well. However, in this article, we will discuss the differences between long-term and short-term rental businesses, discussing the pros and cons of each type.

What is a vacation rental business?

The vacation rental business is geared towards traveling or on holiday customers. Real estate for short-term rent in guest houses, hotels, B&B located in picturesque old towns, seaside resorts, national parks, ecotourism centers, etc.

As far as management is concerned, short-term leases have some peculiarities. The positives include:

  • Higher profit. With consistently high occupancy, your monthly income will be significantly higher in the short term than in the long term.
  • More flexible pricing. You can set the rental price depending on the tourist season, weekends, and holidays. This will allow you, on the one hand, to be in an advantageous position among competitors, on the other hand, to increase income during a period of high demand.
  • Opportunity to communicate with many people and share impressions and experiences. Short-term rentals are definitely for you if you are a sociable person who loves new acquaintances.
  • The prospect of active development. You can continually improve your stay, offer guests additional services, receive constant customer feedback, and actively represent yourself on online platforms.
  • The ability to constantly monitor the condition of housing, and provide regular cleaning of premises. What’s more, many platforms, including Airbnb, offer host property insurance. They compensate for possible damage from unscrupulous customers.
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The pros of vacation rentals are:

  • Large expenditures of time and expenses for routine tasks. Each guest must be met, helped to check in, and also cleaned the room after each guest purchases the necessary consumables. Yes, you can use professional cleaning services, but this is associated with additional costs.
  • The need to think through everything to the smallest detail. A person who has come on vacation expects that the apartment will have everything you need, including shampoo and disposable slippers. You will need to think through all these details.
  • Great intensity of management. You will need to constantly respond to messages, update the price list, leave reviews for guests, and monitor your ads. Specialized Airbnb software, for example, Airbnb automation, will help to optimize these processes. You can set up auto messages, auto pricing, auto tasks, and other useful automated features there.

The profitability of a short-term business depends on what is nearby. For example, vacation rentals are the perfect solution for you if you live in a city full of tourist attractions or close to a famous resort.

What is a long-term rental business?

The target audience for long-term real estate rental is people who live in a particular city permanently to feel at home there. They rent housing for everyday life and not for holidays or business trips. A long-term lease agreement is concluded for months and even years. This type of lease also has its nuances.

The main pros of long-term renting are:

  • Saving time. You do not have to look for new customers and serve guests constantly. During their stay, your clients independently equip their life, buy everything necessary for life, clean the premises, and pay utility bills (in whole or part). The property host deals only with significant problems – for example if the equipment is out of order.
  • Less managerial work. If you rent out your accommodation for several months or a year, you do not have to constantly communicate with new guests and monitor the relevance of prices and announcements. Perfect for introverts, right?
  • Stable income. Finding long-term clients allows you to plan your budget without fear that the tourist season has failed or that competitors will constantly poach your guests.
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But it has disadvantages too:

  • Lower rental cost.
  • Less flexibility in pricing. Yes, the owner can occasionally revise the price, but it will not work to raise prices depending on the season or holidays.
  • More problems with unreliable clients. Payment is usually made monthly, so you will have to spend more time getting rid of irresponsible tenants if such a need arises.
  • Great responsibility to clients. If a person lives in an apartment all the time, equipment malfunctions or other force majeure can become a natural disaster: for example, if a washing machine breaks down. And in apartments for short stays, it may not be at all.

The business of long-term rental of real estate is stable, although not the highest, passive income that does not require constant involvement from you.

Conclusion: What is better for You?

To make the right decision in choosing the type of rental property, follow these theses:

  • Evaluate your property’s location, and analyze your potential audience and competitors. Are there tourist facilities nearby? Are you in a metropolitan area with many business centers? Are there resorts nearby? Are there many hotels and guest houses in your area?
  • Plan how much time and effort you will put into running and growing your Airbnb business. Delegation? Excellent! But you still have to spend much time on a short-term rental business. And compete with other entrepreneurs. However, your profit will be higher.
  • Evaluate whether you are ready to work in a team with other professionals, actively promote on online platforms, or prefer a stable passive income without much effort.
  • Find unique features that would make you stand out from your competitors. Special atmosphere, authenticity, proximity to important objects – use your advantages at 100%. And be sure to use professional quality photos.
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Considering all these factors, you will be able to choose the format that is right for you and will make you a successful entrepreneur. Good luck with your Airbnb business!

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