Short Term Rental vs Long Term Rental

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So you decided to be a landlord and not sure which way to go- short term tenants or a long term tenant? I know it seems that I’m biased towards short term rental but I also own long term rentals and I am constantly weighing my options.

Of course you have to consider if the location of your rental makes sense for short term or better for long term rental. Heres a few pros and cons to consider:

Note: short term rental = any lease less than 28 days long

PROS to short term rental:

  1. More Income: You can make up to double the annual income of a regular long term rental (ie Long term: $24,000/yr vs Short term: $40,000/yr)

  2. Flex space: You can use your space anytime you want. If you have guests in town, you can easily time it so they can stay with you in their own private space.

  3. More control: You can keep a constant eye on your investment and see it on a weekly or monthly basis when tenants check out opposed to yearly and hoping your long term tenant was keeping up the place.

  4. Your space, your rules: Depending on your city you can be more choosey with your tenants without being subjected to discrimination clauses (Of course don’t be an asshole by discriminating) and eviction proceedures.

CONS to short term rental:

  1. Constant turn-around: Having to find tenants to fill your unit multiple times a year

  2. Inconsistent Occupancy: Having to abide by off-peak and peak seasons will directly affect your rental income

  3. Fully Furnished: You’re creating a home not just a space for someone. Which means you also need to account for all the furnishings in the space, replace it when its damaged etc.

  4. Paying taxes and obtaining permits: depending on your city you may have to pay hotel tax and get permits. For city of Seattle, all short term housing landlords must register their space, be subjected to inspection, have a business license to operate and pay city taxes.

  5. You might not be covered: Some home owner’s insurance companies DO NOT cover short term rentals. If you had a long term tenant, the unit (not the tenant - they would need renter’s insurance) is insured under your home owner’s insurance umbrella. Check with your insurance company as you may need to switch.