Traditional wisdom for real estate investors says that long term tenants are the holy grail for anyone looking for steady rental income. Traditional wisdom is often wrong though. (Try telling the Wright Brothers that humans aren't meant to fly.) Here are five reasons short term leasing may be the best option for you.
Short Term Leasing Produces Higher Yields
While long term tenants provide a bit of stability, they also lock you into the going rate for rentals in your area. These monthly rates are typically much smaller than what you can get by renting to different tenants for smaller sections of time.
This is especially true for properties in central locations (large urban locations like Los Angeles or Chicago) and for properties in areas with tourist and travel appeal (hello, Nashville).
Shorter Leases Offer Flexibility
By listing properties through a service like Airbnb, you can change your strategy as it suits you. You can list an entire house for rent or just offer certain rooms. Perhaps you need to live in your house when you first start your real estate investment strategy. With short term leasing, that is an option. Plus, you can change that strategy once you're ready to invest in a separate property.
With long term tenants, you don't have as much control over when someone moves in or out. The ideal is that they stay for a long time, but it isn't guaranteed. With shorter leases, you have the option of living in your property some of the time (perhaps as an off-peak vacation home), all of the time, or none of the time.
You Can Keep an Eye on Your Property
One of the downsides of leasing is that you might not have the best tenants. Typically, no one will care as much about your property as you do. In long term lease situations, this could lead to deferred maintenance or ignoring problems that you would want to fix right away.
With short term leasing, however, you have guests leaving on a regular basis. That provides plenty of opportunity to make sure everything remains in good shape.
There Are No Eviction Worries
For the worst tenants, those who fail to pay or are destructive, you want to get them out as soon as possible. Unfortunately, that can be a drawn out process for long term rentals. Delinquent tenants can cause months of headaches and severely limit your profit.
Occasionally, you will get a less than considerate guest in a short term rental. You don't have to deal with them for months on end, though. Instead, you can correct the problem and move on to the next guest, who will likely cause no problems whatsoever.
Short Term Leases Allow for Creativity
In the long term tenant game, it's often a race to the average. You don't really want your property to stand out so much as blend in. With Airbnb, though, you have the opportunity to let your personality shine. You can be more creative in your design and your marketing, providing a unique experience for your guests.
Many investors are unable to avoid the siren call of long term tenants. If you have an eye for the unconventional, however, then you can reap the reward of short term leases. For more guidance on how to start capitalizing on your investment property, get in touch with The Lease Killers today.
The Lease Killers