Are Short Term Rentals Better than Long Term Rentals?

Question

Hey everyone!

Let's end the debate here between the two! Comment below why you believe STR's or LTR's are better as well. Let's hear it!

Alex Sabio · Answer

@Joshua Messinger I’ve had both and the answer for me is STR and it’s not even close. There is so much cashflow in STRs that it becomes easy to manage. I’ve had LTRs that generate $400-$500/month and they were still difficult because there’s just not enough meat left on the bone to solve problems. My STRs generate on average $5K net profit every single month. Whenever issues or problems arise, I can easily pay the best professionals to fix the problems. I live 2,000 miles away and manage everything remotely. I can also hire tons of preventative professionals to maintain the property.

Nathan Gesner · Answer

There are too many factors involved to really make this a contest. Is there enough demand for a short-term? What will it cost to furnish and maintain? Do you have time/tools to manage it or will you be paying a manager? Taxes? Regulations?

In my area, most short-term rentals produce really good income for 5-6 months and then nothing the rest of the year. After counting for set-up costs, management, taxes, etc., you're making about 25% more than you would as a long-term.

Dominic Kosteris · Answer

Long term rentals by a mile. I mean, who wants to prep a unit every few months after the short term contract is over?

Bruce Woodruff · Answer

STRs by several miles....I love cleaning my rentals every week or two, let's me know that they are in perfect shape...

John Todd · Answer

For me, the answer to the questions depends upon your location. I live ~35 miles from the Alabama Gulf Coast and own 5 short term, beach front rentals (1-5BRs) that my wife and I manage directly. They rent like beasts with gross annual revenue of between $45k to $80k with an average 'operating expense ratio' of 50% (typical for these types of rentals). We live close by and can check on our units frequently (weekly if needed). We have a list of vendors that manage our problems with a phone call and a cleaning company that is excellent and almost never lets us down.

I'm not sure we could provide the level of service needed to be this successful if we lived far away. Our proximity also provides a level of reduced anxiety when a tropical storm jumps into the gulf.

We could give up the management (and someday, likely will) to a local management company but we would also be giving up the management fee which is ~20% (of gross) on average. A plus for us is that we both enjoy the challenges of managing this 'side business'.

BTW, we also own and manage two lTR condos/apartments that we have purchased in the last 2 years. The net monthly cash flow from each is ~$500-$600. They are a cinch to manage in comparison to the STR but the cash flow is significantly different. We branched out into lTR because of the soaring prices of beach front condos over the past two years (in spite of COVID and in spite of Hurricane Sally).

I've rattled on...bottom line for me is that I don't think I would have jumped into the STR beach condo market if I didn't live close by.

John T.

L.A. (lower Alabama)

Scott M. · Answer

All depends on your goals and objectives and what you consider the definition of better to be. To each their own.

Terrell Garren · Answer

Just fyi, this has been discussed myriad times. There is a search function.

Are Short Term Rentals Better than Long Term Rentals?

Are Short Term Rentals Better than Long Term Rentals?

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