Short- or Long-term: What to consider before letting out your property
There is a lot of talk amongst property owners regarding letting out over the short- or long-term and which is the more lucrative route. A lease of a year would be considered long-term and anything less, short-term. Assuming you have no need for the personal use of your property in the short-term, it makes sense to weigh up the pros and cons of each route before making a decision, so here is some food for thought.
First and foremost, it is well-known that achievable short-term rental rates are higher than long-term. It is easy to understand why a holiday-maker from Europe spending 2 months in a Sea Point apartment would be willing to pay a significantly higher monthly rate than a local needing accommodation for a year or more. [A word of caution, however: always consider what vacancies you may experience over time when letting short-term.] A further advantage that short-term letting offers you is added flexibility. If you may want the use of your property yourself over a holiday, for example, or if you may wish to sell in the near future, short-term letting would be a way of keeping your options open. Prospective purchasers looking to be owner-occupiers would see value in not having to wait as long for vacant occupation.
However, short-term property management requires more intense and frequent administration and is therefore more expensive, plus there are cleaning and laundry costs to consider. Furthermore, normal/fair wear and tear will almost certainly progress faster, particularly when you consider the (arguable) reduced sense of “ownership” a short-term tenant may exhibit. Never mind the risk of rule infractions that may occur in the case of community schemes, where a short-term tenant may be none-the-wiser, putting an owner at risk of fines and relationship strains with other owners/managers. Exposure to a wider variety of tenants as a result of short-term letting puts a property owner at greater risk of landing up with a not-so-good tenant at some time or another. To be able to “hang onto” a reliable and responsible tenant for the long-term is of great value! A further obvious consideration is that short-term letting requires a property to be fairly comprehensively furnished and equipped. If this is not the case for your property when considering options, this expense should be factored in, together with the time and expense involved in sourcing, purchasing and transporting the necessary.
If your decision is purely a financial one, we recommend a property owner spends time “doing their maths”. One should keep in mind all of the above and, not least of which, realistic vacancy periods when letting short-term, before making a call.
Author: Teresa Hamilton