Do Short Term Leases Help Or Hurt Landlords?

Short- and long-term leases both have different benefits and setbacks, before you begin any lease discussions with a prospective tenant you should research the pros and cons.

Although some landlords may be open to offering their tenants short-term leases, the reality is that most landlords don’t actually take the time to think about if that lease will potentially help or hurt them.

In this article, we will break down short-term leases and provide you with more information about if this popular lease term actually helps landlords or hurts them.

What Is a Short Term Lease?

A ѕhоrt-tеrm lеаѕе gеnеrаllу rеfеrѕ tо a lеаѕе wіth a duration of lеѕѕ thаn ѕіx mоnthѕ. Often, thеу are bаѕеd оn a mоnth-tо-mоnth rеntаl аgrееmеnts, whісh may оr mау not bе rеnеwеd аt the еnd of each mоnth.

Although mоnthlу аgrееmеntѕ аrе thе most соmmоn, thеу mау bе wееklу, оr еvеn lеѕѕ thаn оnе wееk in thе саѕе оf vacation rеntаlѕ.

Shоrt-tеrm lеаѕеѕ are mоrе соmmоn іn аrеаѕ wіth hіgh demand аnd lоw supply оf rental рrореrtу аѕ lаndlоrdѕ can аffоrd to be mоrе раrtісulаr аbоut who they сhооѕе as tеnаntѕ, аnd can rаіѕе the rent at thе еnd оf еасh ѕhоrt lеаѕе реrіоd.

Young couple moving in new place

Do Short Term Leases Hurt Owners?

Yes, it’s true that short-term leases do offer landlords some flexibility but the reality is that a short-term lease means that a landlord may have their property rented for 3-6 months at a time but it’s entirely possible that their rental property may not be rented for one month or more at a time because the success of these types of leases is all based on demand.

With a long-term lease, a landlord also benefits from the following:

  • Income stability
  • One consistent tenant for the next 12 months or longer
  • Most tenants who opt for long-term leases have higher standards for their rental properties than short-term
  • You can plan for the future with a long-term
  • Less turnover Maintenance Costs

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For property management in San Diego, Las Vegas or Arizona contact Goldenwest Management today by calling us at (866) 545-5303 or click here to connect with us online.

Short Term Vs. Long Term Rental – Which One Is Better?

Phoenix Rental Homes

As a property owner one of the most important questions you need to ask yourself is if you are going to target short term or long term renters because each represents a different segment of the rental market and comes with its own challenges.

In today’s article we will break down short term vs. long term rentals so you will know which option is right for you.

Short Term Rentals

Some of the obvious pros to short term rentals include the fact that you could use the rental property more often during the year as a vacation home since it won’t be occupied for 365 days and you could also enjoy a higher rental income as well since rentals especially in big cities like San Diego, Las Vegas or Phoenix can rent for more money during peak season.

The cons of short term rentals include the need for more furnishings and upgrades since if you’re marketing your property as a vacation home you will need to keep upgrading it so it stays attractive to buyers.

Short term rentals aren’t always the best option because they’ve come under heavy fire in the last 12 months since homeowners don’t like the instability that they can bring to neighborhoods and many companies don’t screen their short term tenants so neighbors don’t really know who is living in the same area as them.

Long Term Rentals

It’s been our experience that long term rentals are always better, especially for the Real Estate investor because long term rentals produce stable, consistent cash flow which helps investors pay their bills, there’s no need to furnish the rental, and long term renters also help to protect the value of the Real Estate investment especially when proper screening of tenants is done since the right tenant is usually responsible and will maintain the property.

Some other benefits of long term rental properties include:

1.       The income stream is often more due to the fact that vacancy rate is much lower

2.       This reduction in “Peak season rentals” is also offset by not having to pay for utilities and regular turnover maintenance (cleaning, high wear and tear)

3.       Short term renters are NOT screened anywhere near the level of long term Tenants. Usually there is no credit report, background check, rental verification, etc…

4.       The laws are still very “occupant friendly” when it comes to vacation renters and so its difficult to just “throw out” occupants.

5.       The guidelines for Tenant eviction are very clear and thorough as it relates to long term vs short term Tenants

6.       Short term is great for seasonal only; but the vacancy rate is normally as much as (6) months or more than 50% so unless you are enjoying the property or living there when its not rented, its not a great steady investment

7.       Management fees or rental fees are much higher with short term. VRBO ex charges 10% to find a tenant, and if you have a professional vacation manager, they charge as low as 20% all the way to 40% in some areas.

8.       Long term management fees are closer to 8-10%

Learn More about Short Term Vs. long Term Rentals

For more information about short term vs. long term rentals, or to get property management for your rental properties contact Goldenwest Management today by calling us at (866) 545-5303 or click here to connect with us online.