

Property Consultant
A real estate investor who buys a property for rental has options of leasing the property for the short-term or for more than one year. Short-term rental is when a property is leased for 90 days or less. Long-term rental is when a tenant has a lease that is one year or longer. However, deciding on which terms to lease your investment property can be a challenging one. In this article, we will highlight some factors to consider that can help you make an informed decision.
Returns
A short-term lease offers a much higher return than a long-term lease. Guests always pay a higher rental than long-term tenants. The fee depends on the location, the size, and the type of home. The only disadvantage of short-term leases is that occupancy is not guaranteed hence inconsistent income.
Long-term leases give you a guarantee of a stable source of income. However, you are unable to increase the rent to reflect market changes such as during festive periods or major events in your city because of the contractual agreement. Short-term leases can yield an increased return to reflect an increase in demand at different times of the year.
Cash flow
Cash flow from short-term leases varies due to seasonality. The law of economics – supply and demand applies more in short-term rentals than long-term rentals. In popular vacation areas, the short-term property can even fetch much more.
In a long-term agreement, it can take time to find an appropriate tenant. This could leave you without an income for some time if there are gaps between contracts.
Flexibility
Renting out a property short-term offers flexibility. As an owner, you can always have the property for personal use and rent it out to guests when you wish. Also, you can always switch to long-term or sell the property with limited notice.
With a long-term contract, there is no flexibility. Once there is a contractual agreement for a period, you will not be able to legally do anything with your property for that particular period. In Dubai, notice of termination of a long-term lease by the landlord if he wishes to sell the property or move into it himself must be given one year in advance.
Management
Long-term rentals require less attention. There is less frequent turnover of tenants hence less cost associated with property management and the advertising of the property to keep it occupied.
Maintenance
Short-term rentals receive increased maintenance than long-term rentals because of the frequent tenant turnover. With long-term rentals, the better part of regular maintenance will be the tenant’s responsibility. They have less wear and tear because tenants tend to take care of the property as if it’s their own rather than a hotel room.
Conclusion
The two investment models have their own pros and cons. The decision depends on how the property investor feels about the risk and reward of the higher income potential versus lower risk of a steady income.