The Pros and Cons of Short-Term Rentals

By Ashley Paskill on April 4, 2022

As a landlord, it is important to consider different ways that you can run your rental properties. One thing you may not have considered is whether or not you should offer short-term leases. While long-term leases are more common, short-term rentals also have their appeal, especially for college students. Consider these pros and cons when determining if short-term rentals are right for you and your business.

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Pros

College-friendly

Short-term rentals are rentals that are leased for six months or less. If college students are those who rent your properties the most, try your best to be flexible with their academic calendar. Even if your target renters are not college students, if you offer short-term rentals and leases, students will be interested, which broadens your market.

Convenience

Sometimes, people are looking for a rental property in a moment of desperation. Being able to offer a short-term rental allows these people to get a place without committing to a long-term lease. If they decide they want to renew their lease because they like the property, great! If not, they are not locked into a longer lease and can use the current lease period to try to find a new place. This kind of convenience and flexibility is important and can help bring in more people.

Shorter lease terms

It may seem obvious, but short-term rentals have shorter leases. This means these tenants only have a few months in your apartment, meaning that problem tenants will be out quicker than they would with a long-term rental. If the problems escalate too much, you still have eviction as an option, but they are typically out of their lease before it gets that bad. If problem tenants leave before having to evict due to their short-term lease, you save time and money that would have been spent filing a lawsuit against the tenant.

More money

Short-term rentals may mean higher turnover, but this turnover allows you to charge more in rent. It is normal for property managers who offer short-term rentals to charge more in rent so they have security between tenants. Having short-term rentals also allows you to change rental costs between tenants in order to find the price point that works for you and your income situation. This allows you to build up savings in case you struggle to find tenants once your current ones leave.

Decrease in subleasing

If you offer short-term rentals, especially ones that are only for the summer, you can avoid the hassle of having to deal with subleasing. This is crucial if you rent to college students. Subleasing has its own ups and downs, but having short-term rentals would decrease the need for subleasing. Students who are only on campus for the school year will not have to worry about finding someone for the space, and you will not have to worry about someone new on the property.

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Cons

High tenant turnover

With long-term rentals, you have plenty of time before you have to worry about looking for new tenants to fill the space. However, a shorter rental term means that they will be leaving within a few months rather than years. Lease renewal is unpredictable with short-term rentals, so you will have to put in more effort to fill the space once the current tenants move out. This means that you will have to do marketing to find tenants as well as make any fixes. You also have to clean the property before new tenants move in. There is less time to do things with short-term rentals than with longer leases.

Variants in payments and income

Short-term leases allow you to charge more money, but this is dependent on you actually having tenants living at the property. With long-term leases, you know the tenants are there for at least a year, but short-term leases are usually about six months. There is less predictability with short-term rentals, especially if people are only staying at your property as a stepping stone before moving somewhere more long-term. This variability means that your month-to-month income can change drastically, so you will need to be prepared and have some money saved up just in case.

Utilities and upkeep

Long-term renters are usually the ones responsible for paying for utilities, but under short-term leases, you as the property manager are responsible. Again, you will have to clean and fix any needed repairs between tenants, and this may be relatively quick. If you rent out weekly or monthly, you will have to do a lot more work more frequently than if the tenants were under a longer lease. Being able to maintain the property and do everything else that comes with tenant turnover in such a short amount of time can be overwhelming.

Deciding whether or not you should offer short-term rentals can seem daunting, and it has pros and cons. Ultimately, you have to know what you want from your rental business and know what works for you.

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