When it comes to maximizing returns on your property investment, choosing between long-term and short-term rentals is a critical decision. Long-term rentals are the traditional choice, but short-term vacation rentals offer lucrative returns for property owners. If you’re exploring rental options for a future rental property, here are a few reasons why short-term rentals are the better option.
Dynamic Pricing Options
One of the biggest advantages of a short-term rental over a long-term rental are the potential earnings. A long-term rental must set static pricing for months or years at a time. Because short-term rentals are for a shorter time period, you can adjust pricing by the day or even by the hour. This allows you to increase prices during busy times to increase revenue, while also adjusting prices down to fill vacant days. This tactic allows you to maximize the potential earnings of your property.
Likewise, your revenue is a bit more reliable than with long-term rentals. A long-term tenant may be late with rent payments or skip them entirely - which can lead to an eviction process (more on that later). With short-term rentals, payment is authorized and collected immediately, leaving less room for violations.
More Flexibility
Converting a property into a short-term rental allows you to keep your options open in the future. It’s much easier to sell the property if there isn’t an ongoing lease between a landlord and tenant.
You also have the opportunity to utilize your short-term rental yourself or offer it to friends, family, or clients. This introduces an advantage that you can’t tap into with long-term rentals where a tenant will have control of the property.
Less Risk of Damage
Long-term renters will be living in a place 24/7. Even respectful tenants will create natural wear and tear over time, which will need to be repaired between tenants. Because short-term rentals are cleaned and maintained more frequently by the property owner or management company, it helps reduce wear and tear and it also allows potential problems to be identified earlier. If problems do arise, it’s much easier for short-term rental owners to access their property without needing to work around a resident’s schedule.
Fewer Legal Disputes
Long-term renting comes with unique laws and regulations that property owners must follow. These regulations are much more intensive around both the application and eviction process. In some cases, these processes can lead to legal disputes which then eat up your time and money. A short-term vacation rental does not need to follow the same regulations, which creates less of an opportunity for these disputes.
A property management company, alongside reservation websites like Airbnb and Vrbo, offer further protection to property owners like fraud detection and chargeback investigations. This helps further reduce your potential losses.
Lucrative Tax Breaks
Short-term rentals can tap into tax breaks that offer lucrative benefits. You can deduct certain business expenses from your taxes:
- Advertising expenses for your vacation rental
- Repairs and maintenance
- Professional services
- Mortgage interest
You should always work with a tax professional to determine your maximum deduction opportunities.
Short-term rentals offer several benefits over traditional long-term rentals. With fewer complications, increased income potential, and the ability to adapt quickly, short-term rentals are a lucrative option for property owners.
Maximize Your Property’s Performance with Urbanize
As an investment owner or property owner, it can be overwhelming to manage your rentals on your own. From tenant screening and lease management to property maintenance and financial reporting, Urbanize takes care of all aspects of managing your northern Colorado rental property.
Explore our Management Services for Property Owners in Northern Colorado
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Urbanize provides luxury short-term rental homes in Northern Colorado. For guests, we provide beautiful, clean homes in Loveland and Fort Collins. You can book your short-term stay on our website or find us on Airbnb. For property owners, we provide critical management services, cleaning services, and inventory management so you can rent your property stress-free.
