Short-Term or Long-Term Rental: Which is best?

As a property owner and landlord with one or possibly multiple investment properties, the aim is to get the very best rental return on your properties and an important consideration to maximise your rental yield and return over time is to determine whether short term or long term renting is the way to go.

As with many investment decisions, there is no one size fits all answer to this question and there are pros and cons to each so lets dive into the nuances of each option:

SHORT-TERM RENTAL

Short-term rentals have increased in popularity and demand over the last few years due in major part to sites like Airbnb, booking.com etc which give travellers increased accommodation options around the world and offer something different to the standard hotel offering.
Short term is generally classified as anything from 1-30 nights.
Location should be your first consideration and if your property is not in an area that sees a lot of tourism and/or visitors from out of town then its quite an easy decision that short term is probably not the way to go!

ADVANTAGES

Flexibility:

Due to the nature of short term being anything between 1-20 night stays, this means your property even if it has a very high occupancy will not always be occupied and this gives you the opportunity to conduct any maintenance you may need to do, commence projects/renovations/upgrades and if you are wanting to make personal use of the property, you can block out dates and enjoy your holiday home yourself.

Higher potential income:

Short term means charging nightly rates which can exceed what you would typically get on long term rental and you can maximize earnings during peak holiday season or during events etc

Not tied to one tenant:

Unlike long term, short term tenants come and go and you don't run the risk of getting stuck with an unwanted non paying tenant or one that is not a good fit for your property and is a cause of added stress.
If you are thinking of selling, it also makes it easier and you don't have to sell with a lease in place or wait for a tenant to move out.

LONG TERM RENTAL

Long term rentals are generally classified as 6 months or longer and have been the traditional option for property investors for many years for a number of reasons

ADVANTAGES

Longer Lease = Consistent Income:

Longer leases mean you are not subject to fluctuations and impact of seasonal variances in your area and income is more consistent and easier to plan for.

Less ongoing maintenance:

Long term renters generally take on more responsibility in keeping the property clean and tending to general maintenance issues whereas short term renters will pick up the phone and expect immediate feedback or action if anything is not functioning 100% as expected.

Easier management:

Once the long term lease is signed and provided the tenant pays on time, you can sit back and have your monthly rent deposited in your account.
The less frequent turnover of tenant means lower management fees, less advertising, less admin and less overall work.

Overall there is no right or wrong answer when it comes down to deciding to rent out long or short term and will come down to your personal preferences, goals and risk/reward factors that you are comfortable with.

As a leading real estate business in Cape Town, South Africa with managed portfolios for clients of long term and short term properties, Kinesis Property can guide and assist you in determining which option is best for you.

Contact us on info@kinesisproperty.co.za or whatsapp +27829316166

You can view a few of our current available long term rental properties HERE.

Short term holiday properties HERE.

Short term Villa options HERE.