When is short-term rental more profitable?

Investing in real estate is a great way to generate passive income. However, in order to achieve a return on invested capital, it is necessary to properly prepare the property for a given group of recipients and to manage the apartments wisely. What is short-term rental and what are the benefits of this solution?

When investing time and money in real estate, the main goal is to obtain the best possible return on investment. Short-term rental is becoming very popular as an alternative to expensive hotels in holiday resorts or areas with high tourist traffic or business centers and allows you to achieve better financial results.

According to The Telegraph short-term rentals can bring approximately 30% higher profits than long-term rentals. This is absolutely possible, provided that the rented apartment is located close to popular tourist attractions or in the vicinity of a business center.


What are the characteristics of short-term rental?

Short-term rental involves renting for less than 30 days and is often called holiday rental, because such offers are most often addressed to tourists. This solution is also very popular among companies looking for temporary accommodation for their employees, so the location of the apartment is very important. When deciding on short-term rental, it is worth taking into account seasonality and demand for such services in a given place.

Without a doubt, short-term rental means frequent turnover of tenants, which requires more time to be spent on servicing such a facility, but proper management brings significant financial benefits. Therefore, it is worth signing a contract with a real estate operator who specializes in managing and preparing premises for rent – from assessing profitability, through interior design, to lease administration.


Advantages of short-term rental

Many people decide to rent long-term because of the stable income and the seemingly easier management of such an investment. However, short-term rental has many advantages that are worth considering when investing in a rental property.


Higher income

Short-term rental can bring higher income than the long-term option, especially during the holiday season. The returns achieved on such an investment are higher despite higher management costs and more time needed to operate a given premises.


Maintaining a high standard

Even though tenants change more often in short-term rentals, such facilities are kept in good condition thanks to frequent cleaning and preparation of the interior for new tenants. It’s also easier to perform routine maintenance or identify minor issues and address them before they become a major problem – long-term tenants typically cause more wear and tear on furniture and appliances.


Flexibility in price adjustments

Premises intended for short-term rental have much greater opportunities to adjust prices, depending on the current market rate, season or interest in a given property. If the property is very popular, you can increase the rental amount to maximize profits.

A short-term rental property can generate up to 30% higher monthly rent than a long-term rental property. Tenants choosing a given apartment for a holiday are willing to pay more per night because the property then competes with hotels and not with apartments from the local market.


How does the quality of finishing the premises affect profits?

The overall guest experience is influenced not only by the style in which the apartment is decorated, but also by the quality of the equipment. Without a doubt, furniture and appliances should be prepared for intensive use, so it is necessary to think through and properly plan each room.

Therefore, if the property is to bring profits, when designing the interior, you must remember that an apartment for rent is not a private apartment, so it is better to focus on minimalism and functionality than the trends prevailing in a given season. Guests appreciate it too consistency and repeatability of services – they know what to expect and adapt faster.


Changing a short-term lease to a long-term one

Some short-term rental properties can easily be converted to long-term rentals. That is why it is so important to equip the property with universal furniture and appliances that will meet the expectations of various guests.

To sum up, short-term rental by its nature requires a bit more commitment and more frequent visits to the facility, but this translates into higher profit. Choosing a professional property management company and automating all possible processes will allow you to reap the benefits of your investment without having to invest a lot of time and energy.


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