In 2012, consumer-booked vacation rentals accounted for one fifth of the lodging market. With the sharing economy in full swing and vacation rentals becoming increasingly popular, a $85 billion dollar market exists from which anyone with a second home can profit.
Before capitalizing on the industry, however, a homeowner is faced with multiple options—an important one being the choice between long and short term rentals. Here we give an overview highlighting the pros and cons of each to help you determine your best option.
Long Term Rentals
With long term renters usually occupying the space for six, nine or twelve months, long term rentals provide stability and a reliable, steady income. A guaranteed monthly income immunizes homeowners from regular vacancies, and hosting long term renters is typically less time consuming than marketing and self-managing a short-term rental.
Along with the lower risk of a long term rental, however, also comes the lower revenue. As rates are not dynamically priced with a long term rental, homeowners lose the opportunity to benefit from higher price points during peak seasons, holidays, etc.
Short Term Rentals
Homeowners who opt for using their property as a short term rental, typically do so for increased profits and flexibility. A quicker and generally more lucrative source of income, a short term rental allows a higher gross revenue.
This type of rental likewise grants more owner flexibility and owner usage; however, with this, also comes higher risk. With the year, season, location and asking price among the many factors that influence vacancy rates, it is not unusual for a vacation property to be free of occupants for 70.4% of the year. Homeowners likewise need to be wary of additional costs associated with short term rentals. Property management fees, utilities, cleaning fees, marketing fees, booking fees and household disposables all contribute to associated costs that can drastically reduce the net income from a short term rental.
While both options provide solutions to homeowners looking to profit from their investment properties, alternative options yielding high rewards and low risk exist as well. Combining the convenience and ease of a single transaction in a long-term rental with the increased gross revenue from a short term rental, rented is the wholesale vacation rental marketplace that promises a competitively derived maximum income with minimum work. For an estimate of what you could be guaranteed or a validation of what you really make today, check out our income calculator.