There may be a high demand for short term rental apartments or vacation accommodation, 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.
However, catering for short term leases may be very lucrative or your could even cater to both short and long term tenancies, depending on where your property is situated.
For example: You could take advantage of holiday rentals during the high vacation season and once that demand lessens, you could make the property available for periods lasting a couple of months.
We'll take a good look at the Pros and Cons of short term rentals vs airbnb vs longer term leases further down on this page.
We have a variety of free Landlord forms to assist you with managing your tenants, such as:
This is typically seen as a period which is less then 30 days, but as is always the case, varies in different territories.
Rentals can be done one a weekly basis or even for a couple of days only.
There is a distinction in the name of the legal form too - 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.
Even a short term rental should be formalized with a written rental agreement, setting out the terms and conditions and obligations of both parties.
If your investment property is in a vacation area, the landlord can also make use of the property as and when.
We actually enjoy having a holiday property (which we use often) without having to worry about linen to launder or cleaning up to do. And having a securely locked owner's cupboard means we don't have to pack a number of items, since we have it there waiting for us. And touch wood, we've never had any incident of our private property being invaded!
The highest rental yield is obviously during the popular holiday periods, but we (as owners) are very happy to make use of the property outside these periods when the place is not so crowded with tourists.
Incidentally, it is not only the rental yield that will determine how good a property investment turns out to be. We've had a number of properties where we had to subsidize the monthly running costs of the apartment, but the capital growth in these locations more than made up for the shortfall!
To a large extent the location of the property will determine how successful a landlord will be in running it as an airbnb.
It is a labor-intensive exercise but can be rewarding both financially and socially. Having said that, it does have the advantage that it is very flexible and the landlord can schedule time-out periods when he/she needs a break.
This is another example where a combination of the two may suit both landlord and tenant.
They may enter into a weekly or month to month rental and if they find the arrangement agreeable, enter into a new long term lease.
We've had requests for a short term let (a month or two) of a fully furnished apartment, and the prospective tenant expects to pay the advertised monthly rate which is meant for a one year lease.
This would be cheap at the price for the tenant but not a situation that we as landlords would want to entertain.
There is simply too much administration involved, not least of which is arranging access to the secure complex which may involve biometric scans etc.
Some apartment blocks also do not allow short term rentals for the above-mentioned security reasons and because short terms tenants do not care if they upset the neighbors.
Before you change your rental terms, you need to confirm with your insurance company that your policy will still cover you as originally specified. You may find that the premiums will be higher for holiday rentals.