Short Term Rental

There may be a high demand for short term rental apartments, but what are the implications for the property owner?

Some landlords will prefer the security of a long term lease, knowing to what extent their mortgage payments will be covered for a specified or guaranteed period of time. This makes it a lot easier to do budget calculations.

Advantages of Short Term Rental Agreements:

* The landlord may be able to charge a higher rent, which is acceptable practice for short term tenancies.

* Many international companies have a need for short term accommodation for their expatriate employees and are prepared to pay high rentals. If your property is well located, the corporate market can be very lucrative.

* You can raise the rent more frequently without having to wait for a long term lease to run its course. The landlord must give proper notice to a tenant of his intention to raise the rent.

* Landlords may be reluctant to enter into a long term lease because of concerns over eviction processes. With a short term rental it is easier to get rid of a problem tenant. In most cases a 30 day written notice from the landlord may be enough to terminate the tenancy.

* A month to month rental agreement may specify automatic renewal. The onus is then on the tenant to give written notice of his intention to vacate. Failure to give such notice may obligate the tenant to another month's rent.

* The landlord can change the terms of the rental agreement more frequently, with proper notice to the tenant.

Disadvantages of Short Term Rental Agreements:

* A higher turnover of tenants may mean higher than normal wear and tear. Short term tenants may not be as caring about a property and the constant moving in and out of furniture can cause damage to walls, carpets etc.

* More vacancy periods. It is often practically impossible to avoid unoccupied periods to effect cleaning of the apartment and to co-ordinate moving out and moving in dates of subsequent tenants. Although the higher rental may compensate for void periods, you may well be liable for tax on an unoccupied dwelling.

* Higher costs of advertising and administration such as tenant screening, background checks, accounting etc. Although some of these costs may be covered by the rental application fees, the landlord will be responsible for the rest.

* More time consuming: Meeting with tenants, showing the property, doing walk-through before and after the rental period.

Perhaps a combination of the two may suit both landlord and tenant. They may enter into a short term rental and if they find the arrangement agreeable, enter into a new long term lease. Generally a short term tenancy will be called a rental agreement whereas a longer term tenancy (6 months and more) will be called a lease agreement. A variety of free real estate contract forms are available to use as templates.

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Even a short term rental should be formalized with a written rental agreement, setting out the terms and conditions and obligations of both parties.