7 Benefits of a Long-Term Rental Over a Short-Term Rental

As a real estate investor with an income property, you have a choice -- you can rent out your home on a long-term basis or a short-term basis. With a long-term rental, you're usually signing a lease lasting a minimum of 12 months. With a short-term rental, you could sign a lease lasting as little as one night. There are benefits and drawbacks to both routes, but here's why you may want to consider a long-term rental over a short-term one.

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When you sign a long-term lease, you can expect a consistent income stream every month. With a short-term rental, your home could sit vacant for weeks or even months at a time, leaving you with less cash flow to enjoy.

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When you sign a long-term lease, it usually stays in place for a year, if not longer. With a short-term rental, you could be signing a new lease every week. That's a lot of paperwork to deal with.

Before signing a lease, it's a good idea to know who you're renting to. With a long-term lease, you generally only have to go through that process once a year, even less frequently if your tenants opt to renew beyond a year. If you keep signing shorter-term leases, you may have to repeat that process more often.

Long-term tenants need to live in their homes for months on end, so they may be more likely to treat your property with respect. Because short-term guests are only unpacking for a few days or weeks at a time, they may be more careless in how they treat your home. The result? The potential for more damage.

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Long-term tenants commonly pay their own electricity bills and sometimes other utility bills as well. But when you rent out your home on a short-term basis, the rate you charge your tenants will generally include utilities. And since your guests may not be so mindful of things like electricity usage, it could result in higher costs for you.

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If you're a hands-off landlord and commonly outsource property maintenance, then the cleanings that need to be done between short-term tenants may not take up much, if any, of your time. But if you maintain your rental yourself, then finding a long-term tenant will mean not having to constantly pop over to clean in between guests.

If you're a landlord who uses a property manager, you'll generally pay less for that service when you have a long-term tenant. There's more work and turnover with a short-term rental, so your fees will generally be higher.

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There's plenty of money to be made in the world of short-term leasing, and in some cases, you might come out ahead financially. On the other hand, there are many benefits to sticking with a long-term rental, so you'll need to weigh your options carefully to see what works best for you.

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