Weekly rentals vs Monthly?

Question

My 26 unit apartment complex currently charges weekly rates and has seen a slight drop off in rent since the crisis began but not as big as I first thought it would. When I read articles and watch videos of other landlords I feel lucky to have it only drop off slightly as it did, but I still wonder if it would be better if i were charging per month.

So my question is in the time we are currently in do you think it would be better to stay with my short term rentals or does the market seem to be going more in the direction of longer term rentals and should I switch to longer term to maybe protect myself more?

Taylor L. · Answer

Short term rentals have (on the whole) taken a beating so far. Yours, however, might be in a different segment of the short term rental market than those that have been severely impacted (vacation and business travel).

It would be good to know more about your property's location and how the rental rates compare to longer term rentals.

Daniel A. · Answer

Hello Dane,

I have always felt that long term rentals were more beneficial to the investor. You lessen the opportunity for vacancies. But I do not own an apartment with 26 units, so I could not speak to a larger scale operation.

My simple thought process would be that, if you're dealing with a higher number of vacancies, you should offer an assortment of leasing options. You don't want to detract someone who may want a 6 month rental by offering weekly or monthly options. And vice versa. But it largely depends on how you have your business set up. You can likely charge more for the short term rentals, but do they stay rented, and do you deal with more vacancy? Sometimes those vacancies consume the profit you made on the short term rental.

As to making the choice based upon the market, it's tough to say. There will always be a market for rental properties. People can't always afford to get a mortgage. Even during these tough times, there will be people with jobs and there will be people who need housing. A lot of people are not risking moving because of the fear of the unknown. With all the different information (true and misleading alike), people are burdened with misconceptions about newly implemented policies and what have you.

You offer the community a housing solution. Have you always done short term options? If yes, what is the reason for that? Have you had success with doing weekly rentals? Are you in an area where you have a lot of nomadic travelers who want something a little more homey than a hotel?

To end, I will simply reiterate: When you're dealing with larger vacancies, sometimes it's best to broaden your options. It is hard to determine what the market will want when we are going through such uncertain times. When you get new tenant applications, ask them what they're looking for in a rental. Send out surveys online asking people what they want. Reach out to the community and see what they're in the market for.

I wish you the best of luck and I hope that you get those vacancies filled.

Dane Delatte · Answer

@Daniel A.

@Taylor L.undefined

I want to thank you guys for taking the time to answer my questions. They are currently weekly rentals from the previous owner. They were set up like that because of the a large number of out of town people that come here to work in the local chemical plants. I am located in south Louisiana, about 15 miles south of Baton Rouge.

I do want to say that when I was the manager of the same complex 7 years ago we had alot more out-of-town workers than we currently do. Even before the Covid crisis I could see a small decrease in so called construction workers looking for short term rentals. These vacancies have been filled by more local people in the last 2-3 years.

My thought process the last few months has been this:

* I make a good bit more doing short term(weekly) than I would with long term. Also, my mortgage(can't refinance until after a ballon payment in about 5 years) that I'm paying is based from the numbers it was making as short term rentals. Now the headaches with short term are enormoous and I would rather do long term but always were afraid to do so due not grossing as much. But my thought now is if the short term market drops to where it is the same as I would make on long term but with less headaches, why wouldn't I just do long term. I guess thats why I'm trying to get a feel of what people think will happen to the short term market because of the current situation we are in.