When it comes to investing in real estate, deciding what type of property to purchase can be challenging. There are several key differences between short-term, long-term and mid-term rental properties when it comes to investment. Each option has its pros and cons and ultimately, the decision comes down to your individual goals and circumstances.
In this blog post, we’ll take a closer look at the pros and cons of all types of rentals and provide you with insights from our experience in the industry. Whether you’re looking to maximize your income or prioritize stability, we’ll help you make an informed decision about which option is right for you. So, let’s dive in!
Rental pictured: The Riverbend Retreat in North Bend, WA.
Short Term Rental – Are They Really the Way to Go?
Short-term rentals have become increasingly popular in recent years, with platforms like Airbnb and VRBO making it easier than ever to rent out your property for a few nights or weeks at a time. While short-term rentals offer several advantages over long-term rentals, they also come with their own set of challenges.
The Pros: One of the biggest advantages of short-term rentals is that they typically command higher nightly rates than long-term rentals. This means that you could potentially earn more money in a shorter period, which can be great if you’re looking to make some extra income. Additionally, short-term rentals offer flexibility, allowing you to rent out your property part-time. This can be especially helpful if you’re only looking to make money during certain times of the year, such as summer or popular events like music festivals or sports games.
Another advantage of short-term rentals is that you can use your property for personal use when it’s not being rented out. This means that you can still enjoy your property when you want to, while also earning extra income when you’re not using it. Additionally, with short-term rentals, you have the opportunity to see the condition of your property more frequently, which can help you stay on top of maintenance and repairs.
The Cons: As advantageous as they are, short-term rentals do come with some downsides. For example, they require more frequent turnover, which can result in higher cleaning and maintenance costs. You may also need to provide amenities like linens, toiletries, and kitchen supplies, which can be expensive. Additionally, short-term rentals require more active management, including check-ins, guest communication, and marketing. Finally, there’s always the risk of financial uncertainty, as there may be times when your property is not rented out.
Rental pictured: Dream home on Shelly Lake in Spokane, WA.
Long-Term Rental – The Ups and Downs of Commitment
The Pros: Long-term rentals, on the other hand, offer a more stable, predictable income stream, as tenants typically sign leases for six months or more. This means that you can rely on a steady stream of income over an extended period of time, which can be helpful if you’re looking for a more consistent source of income. Additionally, long-term rentals typically require less frequent turnover, which can result in lower cleaning and maintenance costs. Tenants are also often responsible for their own utilities, which can be a significant expense for short-term rentals.
The Cons: Long-term rentals also come with their own set of challenges. For example, they typically command lower nightly rates than short-term rentals, which means that you may earn less money in the long run. Additionally, long-term rentals require a greater level of commitment, as you’re committed to renting out your property for an extended period of time. This means that you may not be able to use your property for personal use as frequently. Finally, if you have a difficult tenant, it can be challenging to get them out of the property and find a new tenant.
Rental Pictured: Darling Tudor in Spokane, WA.
Mid-Term Rental – Sometimes the Happy Medium
If you’re looking for a middle ground between short-term and long-term rentals, mid-term rentals might be a good option for you. Mid-term rentals typically last anywhere from one to six months and are popular among professionals who are looking for a more comfortable and convenient alternative to hotels. It is common for traveling nurses and those with non-permanent employment contracts to seek out mid-term rentals.
The Pros: Mid-term rentals offer a higher nightly rate than long-term rentals. The renters are usually on a contract for work or traveling for professional reasons, which means that their employment is stable. There is also the option for extending a lease for a mid-term rental if you end up with a good renter who also has an employment contract extended.
The Cons: Similar to short-term rentals, mid-term rentals can be more unreliable for income as there’s a higher turnover than with a traditional 12-month lease. Additionally, you’ll need to fully furnish the property, which can result in higher upfront expenses. Sometimes finding a renter can also be more challenging for a mid-term rental, as there’s a smaller pool of potential tenants looking to rent.
At the end of the day, the decision between short-term and long-term rentals comes down to what you value most: higher income or stability. Short-term rentals offer the potential for higher nightly rates and greater flexibility, while long-term rentals offer a stable income stream and less frequent turnover.
As industry professionals, we understand that every property and owner is unique, and there’s no one-size-fits-all solution. We encourage you to weigh the pros and cons of each option carefully and consider consulting with a property management company or a trusted Realtor for guidance.
Not sure which rental option is right for you? Let us guide you through the decision-making process. Reach out to us here for a free consultation.
Looking for a hassle-free way to manage your rental property? The Slumber Spokane team of professionals can handle everything from guest communication to fully furnishing your property. Contact them here to learn more.