Many property owners began their investment journey by taking advantage of the exponential growth of companies like Airbnb and VRBO to enter the short-term rental market. Some owners rode that growth and saw incomes far exceeding what would have come with a long-term rental. But as the economy begins shifting and interest rates rise, some short-term owners are reconsidering their strategy and deciding between selling the property all together or beginning the transition from a short-term to long-term rental property.
While the per-night income of an Airbnb rental can be fantastic, there are many advantages to the long-term rental market. As you weigh your needs and the potential of your property, here are four reasons to consider converting.
Four Reasons to Make a Long-Term Rental Conversion
1. Consistent Income
A steady rental income stream makes budget planning and saving goals easier to meet. Short-term rentals cater to business and leisure travelers, making it a non-essential expense that feels the brunt during an economic downturn. Long-term rentals are always needed, and longer-term lease options offer landlords more stability.
2. Easier Property Management
High turnover brings a greater need for active property management and maintenance. By contrast, long-term rentals typically have a much lower rate of turnover. A quality tenant cares for your property as a home rather than a disposable commodity, meaning fewer tenant screenings and a reduced need for cleaning, advertising, and administration services. If you choose to use a property management company, fees for a long-term rental property average 10% of your gross rental income, while those for short-term rentals average about 40%.
3. Savings on Utility Fees
No one wants to worry about whether the electricity is going to be on or the wi-fi connection is working when they’re on vacation. As a short-term rental, all of those bills come to the landlord. While those fees can be wrapped into the per-night rental rate, gaps in the rental calendar often mean that the landlord pays the bills rather than the property. Long-term rentals, however, often come with the agreement that the tenant pays many of the utility costs.
4. Basic Maintenance House Supplies
Are you tired of worrying about the supply of toilet paper at your short-term rental or if the lightbulb in the bathroom is burned out? With long-term renting, basic house supplies are the tenant’s responsibility. That means you don’t have to worry if they run out of toilet paper or need help operating the thermostat.
Transition From a Short-Term to Long-Term Rental: Six Tips
Once you’ve weighed your financial needs and the best utilization of your property and decided to convert from a short-term to a long-term rental, it’s time to get to work. Here are six things you should do to enter the long-term rental market.
1. Research the Rental Market
Get your home’s estimated value off Zillow. Compare your property to other advertised rentals and evaluate the current availability of rental homes in your area.
2. Research Rental Laws
Long-term rental laws differ from short-term, so you’ll want to make sure property is compliant. You’ll need to learn local and state rules about tenant screening, anti-discrimination statutes, property livability and safety standards, security deposit escrow, tenant privacy, landlord access, lease breaking, and rent collection.
3. Prepare Your Property
Themed decor for a vacation home is often a selling point, but long-term tenants will want to create a home. Updating the paint and furnishings in your rental to more neutral options will foster a living environment rather than a vacationing one.
4. Begin Advertising
How will you inform people that your long-term rental is available? Word of mouth, For Rent signs, building a website, using free online listings like Facebook and Craigslist? Developing a marketing strategy, taking pictures of your property, and advertising on multiple platforms to get just the right tenant is an investment of time that can lead you to a stellar tenant.
5. Write Your Lease
Both Federal and state governments have specific requirements regarding fair housing. There are free forms available at Law Depot to help get you started. You’ll need to decide between a fixed-term lease or rental agreement, how you’ll collect rest, assess late fees, set the terms and limits of occupancy, and more. The legal requirements govern every detail of the landlord-tenant relationship, so covering all the details is essential.
6. Hire a Property Management Company
The details can quickly become overwhelming. If you find yourself mired in the legal details of anti-discrimination laws while working through your tenant lease agreements and haven’t even gotten to the intricacies of marketing and advertising your property, hiring a property management company may be the way to go. A professional manager offers years of experience and lists of trusted contacts for everything from maintenance needs to legal assistance. Most importantly, their primary purpose is to ensure that your investment property is a success.
Partner With the Experts
Ultimately, there is a lot to think about when deciding to make the transition from a short-term to a long-term rental. However, talking with an expert can help you make the best decisions for long-term success. We keep our eyes and ears on the market to ensure your properties find and appeal to the right tenants at the right time. Call or text Darla Andrew today at 503.515.3170 to learn more about how we provide the support you need to confidently enjoy the rental process.