Long Term vs Short term

The debate of Long-Term Vs Short-Term rental accommodation has been one that has increased substantially since the inception of companies such as Airbnb.

Traditionalists argue that the long term market provides a reliable, consistent and safe income while a property manager maintains the property to make it hassle free for the landlord. With 12-month leases in place, a bond paid upfront and fees for breaking the lease they know what their weekly income structure looks like and can plan their costs around this while often seeing a 4-6% return on the long term market.

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We personally have stayed in hundreds of short-term properties and Airbnbs across the globe during our travels, we also have properties on both the long- and short-term markets so can give you an accurate idea of what potential income you could see from both options and what opportunities exist for both areas.

Why choose the long-term rental market?

The long-term property market has been the most common used form of investment for residential property with leases generally being set at 12 months. This provides a consistent and steady income stream that a landlord knows will remain constant as opposed to the potential fluctuations of the short-term market. There are many regulations and laws around the long-term marketplace and tenancy agreements which should be considered.

Is the short-term market a better option?

The short term market offers a number of flexible options the long term market doesn’t. The ability to stay in the property when you wish as well as block dates of availability and zone off areas as you wish give the STR market unique benefits over the LTR market. In addition the nightly rates you can achieve from the STR market can outweigh the LTR market significantly

Can I rent someone else’s house in Airbnb?

This process is known as rental arbitrage and is used in the short term market around the globe. It is essential to check the rules and regulations around this in your particular state or country as many countries have changed rules around the ability to do rental arbitrage. Touch base with the Novaturient team for more details about if your area suits this style of rental.

What if a guest trashes an Airbnb?

Airbnb has a host guarantee which provides hosts with $1 million USD in coverage in the rare even that a property or belongings are damaged

How much can I make renting STR vs LTR?

The earning differences can be vastly different, but there are certainly areas that need to be considered for both cases. Saturation of the marketplace, locality to beaches, entertainment, shopping centres, scenery etc can be very beneficial to the STR market. In our experience we have seen the STR market see 15-50% increased gross returns on annual rental income. There are pros and cons to each market place though so we recommend reaching out to the team to discuss the best solution for your personal situation

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