Should your investment property be a short-term rental?
31 March 2020
Considering renting your investment property out on a short-term basis? Here are some pros and cons
A short-term rental strategy can be a viable practice for your investment. However, it is important to acknowledge potential problems that can come with this when renting out your property.
For any investment property owner, the potential for periods of vacancy is unnerving. When you choose long-term rental, the likelihood of finding a reliable tenant that will provide you with a guaranteed continuous income stream can outweigh the uncertainty that comes with short-term.
However, in peak periods, a short-term accommodation model has the potential to be more lucrative. When demand is highest, you can charge a premium rate for your investment property per night. Through this, if you can keep vacancy levels low, you can benefit from a greater return on your asset.
With a short-stay approach, there is also a level of flexibility. If you own a coastal property and feel like relaxing on the beach or frolicking among the waves in the warmer months, you can simply block that time out for yourself.
If you own a coastal property that you don't want to rent out long-term so you can enjoy it in the summer months, renting it out short-term during quieter months could be a great option for you.
While you might not think it, the potential for damage in short-stay properties is seemingly quite low.
Long-term tenants will need to move in all their heavy goods, and that can cause scuffing or damage to your walls and floors. As you will fully furnish your short-stay property, there is no risk of your tenants causing this damage.
Through short-stay, there is great potential to broaden your horizons through the people you will meet too. Whether it is well-travelled foreigners sharing their adventures of the wide world, or business people dropping in for a conference or event, the potential connections you can make through short-stay renting can come in handy for the future.
However, this may have potential downsides as a short-stay rental model involves a revolving door of tenants and the many impressions they can give your neighbours. Loud noise and music that stretches into the night is very likely to leave them upset. If your tenants are looking to enjoy their short stay in a consistently noisy manner, that could leave you open to action from the council if you are reported.
Short-stay rental can also be very time-consuming. From organising cleaning to responding to feedback and actioning it, it is vital to create a positive experience that will generate positive feedback. Failure to do so can cost you potential tenants and influence your returns.
While the newer, flashier short-stay approach to property management has been gaining momentum among investors, a tried and tested long-term method is seemingly the safest way to gain a consistent return on investment from your asset.
Though the temptation to rent your property short-term can be great, there are obstacles that can cause you quite a deal of pain.
As an investor in the property market, your goal is to obtain the best possible return on your investment. At Little Real Estate, the team provides unparalleled service from experienced professionals to ensure our clients get the best possible return.
If you are interested in seeking professional property management, get in touch with our talented team today.