The Income Potential in the Rental: Short-Term v. Long-Term in 2022

Investing in real estate is one of the best things you can do. Not only does the property gain equity over time, but you can also generate monthly income through your tenants. Not a bad deal, right? When it comes to renting out your property, you have a couple of options – short-term or long-term. Let’s look at the income potential and the pros and cons of each.


Short-term Rentals

A short-term rental is a home that gets treated like a hotel. You won’t have tenants; you’ll have guests who will stay a few nights to a couple of weeks at a time. The income potential with a short-term rental can be far greater than a long-term rental. In some popular real estate markets, short-term rentals can generate as much as 2-3 times more than long-term rentals!

Short-term rentals are also easier to maintain since you will have easier access to the property and can inspect it weekly or so if you’d like. With a long-term rental, you do have the right to inspect the property, but most landlords only do so once a year or whenever a tenant moves out. Even better is that the property will be cleaned between visitors, so you won’t have a year’s worth of cleaning and damage to deal with like you could with a long-term rental.

But of course, there are some challenges to short-term rentals. One is that they are a lot more work and a consistent flow of income is not a given.

If you live in a place with seasonal visitors, your property may be sitting empty for weeks or even months at a time. You’ll also have higher operating expenses with short-term rentals. These properties need to be furnished, and you must cover all of the utility costs like electricity, internet, water, and trash. You’ll also have to deal with more HOAs and cities cracking down on short-term rentals, which could lead to your inability to rent out your property.


Long-Term Rentals

With a long-term rental, your property will likely be leased for at least 12 months at a time. This makes it easier to budget for maintenance and repairs. So, even though you may not have the earning potential you have with a short-term rental, you do have a steady and reliable income from the property.

The operating expenses of a long-term rental are much lower than those of a short-term rental.

You won’t have to furnish the home or keep things like towels and toilet paper in stock. Your property likely won’t have as much wear and tear since long-term tenants aren’t as rough with the property as someone who is on vacation.

Having a long-term rental is also easier from an administrative point of view since you won’t have to deal with as much turnover.

The downside of a long-term rental is that there is more risk of nonpayment, which can lead to a lengthy, expensive, and stressful eviction process. There’s also the risk that you get a problematic tenant who likes to complain about everything or who consistently pays their rent late.


Want To Purchase An Investment Property?

If you’d like more information or to run some numbers to help decide which route you’d like to take, we are here to help. Whichever way you decide to use your investment property is a good idea. Be prepared for challenges, but look forward to extra monthly income.



Whether you are a first time homebuyer or you're ready for a bigger home and you've decided to sell,
LUXRE is here for YOU every step of the way!

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