Long-Term Rental Properties:
Steady, reliable income:
Long-term rental properties provide a consistent stream of income, which can help landlords plan their finances and cover their expenses.
Less work and hassle:
With long-term rentals, landlords typically only need to worry about maintenance and repairs between tenants, as opposed to the ongoing cleaning, upkeep, and marketing required for short-term rentals.
Fewer legal and regulatory issues:
Many cities have strict regulations around short-term rentals, including licensing requirements, taxes, and zoning restrictions. Long-term rentals are typically subject to fewer regulations and may be easier to manage from a legal standpoint. In Newfoundland, new regulations are expected for short term rental properties in April 2024. Here is a link to CBC news article on the topic.
Once a tenant signs a lease for a long-term rental, the landlord is committed to renting the property to that tenant for the duration of the lease term. If the landlord wants to use the property themselves, they are restricted by the lease terms agreed to.
Potential for difficult tenants:
With long-term rentals, landlords run the risk of renting to difficult tenants who may cause damage or fall behind on rent payments.
Limited opportunity for higher rental rates:
Landlords may not be able to adjust rental rates as frequently or as much as they could with short-term rentals, which could result in missed income opportunities.
Short-Term Rental Properties:
Higher rental rates:
Short-term rentals can command higher nightly or weekly rates, which can lead to increased income potential for landlords.
With short-term rentals, landlords have more control over their property’s availability and can adjust rental rates to respond to demand.
Opportunity for personal use:
Landlords may be able to use their property for personal use during periods of low demand.
More work and upkeep:
Short-term rentals require ongoing cleaning, maintenance, and marketing efforts to attract and retain guests.
Potential for inconsistent income:
Short-term rental income can be less predictable than long-term rental income, as it is subject to fluctuations in demand and seasonal patterns.
AirBnB and VRBO are no longer new to the market. Short term rentals are more common today and competition is increasing, leading to higher vacancy rates and tighter margins.
Legal and regulatory challenges:
Short-term rentals are subject to a range of regulations and taxes that can be complex and time-consuming to manage. Cities may require permits, limit the number of rental nights per year, or impose other restrictions that make short-term rentals difficult to operate.
In summary, while long-term rentals offer steady income and fewer regulatory issues, short-term rentals offer higher income potential and more flexibility, but also require more work and come with greater legal and regulatory challenges. The choice between the two ultimately depends on the landlord’s goals, resources, and tolerance for risk.