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So I’ve been renting my apartment on AirBnb for just over 2 years now. I’m crunching the numbers and I’m seeing that my income with short term rental is slightly less than what I would get with a long let (6 months or more) when considering today’s market prices. I always thought STR should bring more profit than having long term tenants but I’m thinking this may no longer be the case in my market.
The STR market here in Malta may have reached saturation ever since I put up my listing, there is no way I could increase prices if I want to be competitive. Long let prices have gone up considerably in the past 2 years due to high influx of foreigners coming to work and live on the island. Just to give you an idea, 2 years ago one could rent a 1 bedroom apartment for €300 - €400 a month, now prices have gone in the range of €700 - €800 a month and this is excluding utilities.
Currently I’m making around €600 a month with STR so its a €100-€200 discrepancy vs a long let.
I’ve never done long lets so I’m curious to ask hosts who have experience with both: what would be the pros and cons of switching to a long let? What would you suggest in my case?
I think long term let would be better if you don’t need your rental in the foreseeable future. Obviously you will get less opportunity to inspect and manage the property. You do need a trustworthy tenant who will look after it. Get a really good legal contract and a good maintenance system.
Indeed that is what deposits are for, and seldom are they enough if the tenant does extensive damage or stops paying rent and you have to take them to court or uses the deposit as the last month or so of rent anyway the deposit is no insurance. There’s no getting away from the fact you have a lot more control with STR. However if you get a good tenant LTR is a breeze. I would recommend charging a little less than the market to get a loyal tenant. My family have experience of such.
True - and if you get bad tenants your life can be hell. We experienced this several years ago. The tenants were lovely people, real sweethearts. They had good references too. But after about six months they just stopped paying.
We had to evict them legally which is a lengthy process and in the meantime, we are obliged to keep paying for the electricity (AC in Florida!), water and other utilities. Had we not done so, that would have been illegal-landlord behaviour.
I am doing a long term let and I’ve found it to be a breeze. It’s important to have a good agent who is communicative and responsive , as well as diligent in carrying out checks abd screening. Does your country have a well developed rental market? Some countries do not have a large rental market and local property companies generally do not have the same level of expertise as countries with mature and large rental markets. I also recently started doing STR (different property) and the margins are honestly not sufficient in my area to justify the venture, but I did it as a temporary gig, as otherwise the place would be left empty for 9-12 months.
I’ve been lucky with the 2 long term renters (more than 6 months), I’ve had. It was a breeze. Less wear & tear on the unit. Less maintenance. Less communication with strangers. Both were responsible. During “the season” I didn’t make as much money but if you consider a full 12 months, it was close with less work.
On the other side of the coin, all is takes is one like @jaquo had and it wipes out all the positives.
I’ve made the best money with the least work on 60-90 day rentals with people in the process of relocating, building a house, or having renovations on a current home.
I’m so sorry that happened. That kind of event can sour you on doing any kind of rental EVER. Plus you seem like a nice person so you don’t deserve someone taking advange of you.
Sadly it is more common than we realize. I’ve been fortunate, it hasn’t happened to me. A friend had something similar happen except he wasn’t responsible for power (water-yes). When they left, the home was left with a smashed sliding glass door, holes punched in the wall, cabinet doors ripped off their hinges, dirty diapers everywhere, cat or dog or baby poop in every room…so sad.
One of the things I’ve been thinking about for long term tenants is to implement some type cash back system to encourage punctual payments which goes like this…
Let’s say monthly rent is £1,000 per month and the contract is 1 year long. I make it a part of the agreement that each mdnth the tenant pays on time, I reward him by putting some rent (Eg £50) into an escrow account. Then, each day he is late, I remove money (Eg £20) from that escrow account.
If he is punctual in paying rent, he can expect to receive a windfall of £600 at the end of the year. Being late with payment eoikd be throwing money away.
For the people with lots of experience in LTR, what do you think of a system like that?
Having done long and short term stays the one thing I do is to inspect the premises at least once a week. This is still your home and you the right to do so especially when it a bnb. This isn’t a lease situation, they are a guest in your home and you have different rights then being a tenant. You can ask a guest to leave at any time due to issues vs a tenant where you have to go thru the courts to get them to leave.
In Los Angeles, long term housing is competitive. If you have a desirable property for long term tenants, it is not uncommon for a landlord to receive offers such as 3-5 months rent upfront in order to secure the lease.
I don’t like the idea of punishing the tenant if they are 1-2 days late with the rent unless you make it very easy to collect the rent online such as via Airbnb Sublets.
I don’t think tenants will like it. Honestly I am always late in payment but I never fail to pay, and after my landlord sends me a couple of strongly worded messages, I paid it up on time everytime, because I didn’t realise she needed it so badly. Have u considered asking for rental reference s? Tenant pre-screening could potentially be more effective.
We have LTR’s and one STR. I find it really annoying to have to remind people to pay their rent, even if they “never fail to pay”. We have the right to collect late fees as per our lease, but we try not to have to go that route. But a tenant like you might force me to do so. It’s not because “we need it so badly”, but because this is a business and you, the renter, agreed to pay xxxx $$ by xxx date. If you don’t you’re in breach of our contract and I don’t like chasing down $$. I would much rather have someone that just pays on time. As far as @Fahed’s idea of offering an incentive, there are a few ideas I’ve heard of surrounding that, but none exactly like what you’ve proposed. I suppose as long as you have it documented in your lease it could work, but it sounds like a pain in the rear to keep track of if each day someone is late you have to remove $$ from the Escrow account. Why not just offer a small discount for paying on the day rent is due?
I did LTR for 27 years. I now do STR, but that isn’t set in stone. I have learned many things being a landlord. So one thing I can suggest, when looking for tenants, don’t ask for a reference from their CURRENT landlord, ask for a reference from their LAST landlord. The reason for this is simple; if they are shit heads, the CURRENT landlord will say they are GREAT because they want them GONE.
Also LTR’s seem to be a tad messier than STR’s but you could put in your lease that every two months, you inspect the unit. Here in Maine, USA we need to give the tenants 24 hour notice before going in to inspect.
Good luck
Aside from you thinking it’s okay to always be late in payment…
Of course, tenant pre-screening helps. But there’s only so much you can do and non-payers always pop-up. Also, people’s circumstances change and they need extra motivation to pay on time when their circumstances change.
If, for example, they’d built up a windfall of £1,000 which is sitting there and waiting for them if they can continue to be punctual, perhaps they may be more motivated to continue being punctual to avoid losing it.
I guess the message wasn’t that paying late is okay, but the message I was trying to put across is that you need to be firm in collecting on time, if u want it to be on time. My ltr tenant pays late once in a while, but I don’t chase as she’s never been later than 2 days. My own landlord never compromises, so that’s one way to enforce, by going down really hard if they just miss one payment on time.
YES!!! I’m dealing with this right now with my current crappy tenants. Well I won’t lie to another landlord, I’m sure as heck not volunteering information about their cleanliness, payment history, etc.
I’m not sure if this was directed at me or @Fahed, but I was actually going to suggest you find out if your idea is even legal. The rental laws might prohibit such a thing.
