When you invest in a property, you’re investing your time and money as well. Therefore, the main goal is to obtain the best returns on your investments. The two common options would be to either rent out your property on a short-term basis or a long-term one, both of which comes with its pros and cons. As of recently, short-term rentals have become a popular alternatives to pricey hotels in vacation destinations or high-tourist areas. On the other hand, long-term rentals provide more stability and consistency with year-long leases and committed renters.
When deciding the direction you are going with your property, the property’s location is of utmost importance. Some of the top places for short-term rentals include Kuala Lumpur, Petaling Jaya, Penang and Melaka; these prime locations are considered vacation areas where there is high tourist traffic all year round. On the flip side, due to the average worker’s earnings, especially those who have just entered the workforce, where they have not acquired the financial stability to purchase a property, there is still a high demand for rentals, especially apartments and single-family homes.
Regardless of which rental option you choose, here are some advantages to both options as well as some potential setbacks:
Long-Term Rentals
Long-term rentals deem as the traditional option for property investors due to numerous factors, including:
- Longer lease length
With long-term rentals, you get to enjoy the security of longer lease length, where you’ll have a consistent deadline and a year-long lease, ensuring that you’ll always have someone in your property paying rent. This means that there is no seasonal variance or off-seasons, for example, during the monsoon season, a property located near the shorelines would most likely be unsuitable for most renters, hence making it difficult to lease out your property.
- Less advertising
As compared to short-term rentals, which have to be advertised constantly in order to put your property out there to fill in for later dates, long-term rental properties are only required to be advertised when your current tenant leaves, and you’re looking for a new one. You would also have a notice on when your property will become vacant, allowing you an ample amount of time to find a new tenant.
- No utility payments
With long-term rentals, the tenants are usually responsible for taking care of their utility payments, such as the electricity bill, water bill and at times, the management fees as well. In the long run, this could potentially save you a lot of money as you would not have to worry about keeping up with utility bills for as long as your property is being leased. This isn’t the case with short-term rentals, where you would still be required to bear all the utility payments despite not occupying the property.
- Short-Term rentals
Short-term rentals are the go-to option for many tourists these days, especially those travelling in large groups or those who are planning to stay for a longer time period, hence the ease in finding Airbnb rentals in almost any location. Here are some of the advantages of opting for a short-term rental:
- Not tied to the same tenant
At times, even proper screenings can’t save you from intolerable tenants, which through long-term rentals, you’d be forced to deal with for a long period of time. This can be avoided with short-term rentals, where renters would commonly rent your property for a couple of days or weeks, then leave with no strings attached. In addition, should you suddenly decide to sell the property, you would not have to worry about having to move your tenant out.
- Higher income potential
This point further reemphasises the importance of the location of your property, as if you own a property in an ideal location, whether it’s in the city, by the beach or just an Instagram-worthy home, there’s a high possibility that your property would be in high demand, especially if you offer a competitive price for it. In doing so, you would be able to earn a lucrative passive income through your property.
- Easier property maintenance
As your property will be vacant after guests leave, you will have the opportunity to be at the property to inspect it after each guest stay, granting you the chance to keep up with maintenance, which in return helps you in maintaining your property value in the long run should you ever decide to sell it. On the flip side, long-term renters tend to create more wear and tear on furniture and appliances due to the longevity of their stays.While both long-term and short-term have advantages, there are several factors that should also be considered, as mentioned in the summary below:
Whether you choose to go with short-term or long-term rentals, be sure contemplated questions about your property, especially in terms of location, size and type of management for the optimal return on investment. If you’re in need of some assistance, reach out to Profere Property Management at +6019-2758200 and we’d be glad to assist you in making the right decision for your property!