Pros and Cons of Long Term Rentals
Ever since the ebola pandemic gripped West Africa, many commercial real estate specialists have been urging owners to shift their investments from long term rental investments into long term leases, warning that the current short term rental boom is unsustainable and somewhat unstable. While long term leases are indeed an altogether different animal than short term leases, the switch can be made provided owners adhere to a handful of basic principles. But how do you go about making this switch?
The first thing any landlord will recommend is that rental growth be kept to a minimum – ideally, none at all – by investing in a good number of long term apartments rather than a small number of short term ones. For a simple yet succinct explanation of this, let’s take the example of a safari park. It is a rare if not unique property that offers visitors not only a chance to get a taste of local African life, but also to try out the various safari paraphernalia (including guided walks, hot air balloons and, on some occasions, top-of-the-line zipline adventures).
Given this unique niche, it would seem quite logical that a rental property with a year-round lease would be a better investment than short term rentals. But this is not the case. While many short term rentals in West Africa tend to be run by middle class families who rent just to earn extra money to send home to their families, safari parks and other outdoor vacation rental establishments often require large sums of money upfront to start up and maintain. And given that West African safaris are popular among both foreign tourists and local African families, this means that even the most sustainable long term rentals will invariably be priced well above what one could pay for a similar property in the local market. You can get more information about rent apartment phuket.
As such, while long term tenants have a number of benefits, they also have a number of disadvantages. The main drawback is that a short term rental might be cheaper but will almost certainly have a shorter ‘hang-time’ – the amount of time a vacation renter has to remain in a property before being forced out. This can mean that tourists who pay for a long term rental in the expectation that they will spend much of their vacation in the property will find themselves staying too long, and paying over the odds. Many long term tenants also find themselves stuck in a situation where they want to move out of the property during the off-season – when it is usually cooler and more hospitable, but when they cannot get their short term lease renewed due to the recession. This can be an uncomfortable situation, especially if the renters do not intend to move back to the United States once they have spent six months or more in West Africa.
Another major disadvantage is that long term tenants are generally not as involved in maintaining the property as their short term rental counterparts. Landlords are more likely to require the tenant to carry out some of the upkeep themselves, such as replacing light bulbs, mowing the lawn and tidying up the interior of the house. While this may sound like a good idea on the surface, it can cause frustration among those who wish to stay onsite. If the landlord is not providing daily or weekly maintenance service, short term rentals could be a less than rewarding investment.
However, despite these disadvantages, long term rentals offer many positive aspects. For tourists looking to experience a unique vacation, it is possible to rent a furnished apartment that is located in a safe and secure part of the city or in an exotic locale. Those hoping to earn additional income through a short term rental will be able to do so in a variety of settings, from plush resort condos to modest apartment complexes. For stay-at-home parents, long term leases offer a stable income stream that can help pay for child care or other necessities. And for anyone else interested in earning a little extra income, long term rental income can help to fulfill that goal.