Long term vs short term rentals (str vs ltr) for property owners

Choosing the right rental strategy for your property can feel like a daunting task, but it doesn’t have to be. While there are plenty of decisions to make, choosing between long-term rentals (LTRs) and short-term rentals (STRs) may be the most important. This decision can significantly impact your investment's performance, so it’s best that you understand which one suits you. 

Let's delve deeper into these options to help you find the best path for your property.

Long term vs short term rentals

The benefits of long-term rentals

Long-term rentals are the backbone of the rental market, offering a dependable and straightforward investment route. Here’s why they might be your go-to option:

• Consistent Income: LTRs are the slow and steady runners in the rental race, providing a regular income stream. This predictability is great for budgeting and financial planning, ensuring you have a clear view of your earnings over time.
• Simplified tenant management: With longer lease agreements, the tenant turnover is significantly lower. This means you can save on marketing, tenant screening, and property preparation costs more often associated with frequent turnovers in STRs.
• Lower operational demands: managing a long-term rental typically involves fewer day-to-day responsibilities. Tenants will handle the day-to-day cleaning and are more likely to deal with minor maintenance and repairs, reducing the need for your constant involvement.
• ‍Direct utility payments: In most LTR agreements, tenants pay their utility bills, which can lead to significant savings for you, especially during extreme weather conditions when the costs of heating or cooling can skyrocket.

The benefits of short-term rentals

Short-term rentals offer a more flexible and often more rewarding investment option, fueled by the rise of platforms like Airbnb. There are many benefits to owning an Airbnb, including:

• Potential for higher returns: The ability to adjust pricing based on demand, seasonality, and local events means STRs can bring in higher nightly rates than LTRs, potentially increasing your overall income.
• Flexibility in pricing: The dynamic pricing model of STRs allows you to maximise your earnings during peak seasons or around special events, giving you control over your rental rates.
• Personal use and enjoyment: One of the unique advantages of STRs is the flexibility to use your property for personal vacations or stays, providing a dual benefit of investment and personal utility.
• ‍Enhanced property maintenance: The nature of STRs means you’ll be regularly completing cleaning and maintenance checks between guests, helping to maintain or even improve your property's condition over time.

Which one should you pick: long term vs short term rentals?

The STR vs LTR debate isn't just about the numbers. It's also about matching your investment strategy to your lifestyle, financial goals, and how much personal involvement you're willing to commit. It’s important to consider the following:

• Your availability for active management: STRs typically require more hands-on management, including guest communications, cleaning, and maintenance. Assess whether you have the time or desire to engage at this level or if the hands-off approach of LTRs is more your style.
• ‍Investment goals and cash flow needs: Evaluate your financial objectives. Are you looking for a steady income stream, or are you able to navigate the variable income that comes with STRs for the potential of higher returns?
• ‍Local market dynamics: Understand the demand and regulations in your area. Some locations are better suited to short-term rentals due to tourism or events, while others may favour long-term stability.

Hometime can help you settle the STR vs LTR debate

No matter which path you choose, Hometime is here to guide you through the complexities of property rental management. Our expertise in both LTR and STR markets means we can provide tailored advice and management solutions, ensuring your property not only meets, but exceeds your investment expectations.

Get in touch with us at Hometime to unlock the full potential of your property with the following services:

• Property styling and photography
• Listing optimisation
• Cleaning services
• Revenue and booking management
• Guest management
• Property maintenance
• Access to Hometime's all-in-one property management software