convert short term rental to long term rental?

Question

I have the opportunity to convert a short term rental into a long term rental.  In this situation, the potential long term guest would be paying rent that is about the same amount as what i'd make as a short term rental.  Assuming this tenant will take care of my place, should I switch the unit over to a long term rental in order to secure guaranteed rental income for an entirety of a 1 year lease?  Do long term tenants tend to cause more wear and tear than a short term guest?

Bruce Woodruff · Answer

The main drawback with a LTR vs STR is that you do not get to get in there and really see the property every week. Tenants often do not keep up the little stuff, or report small drips/leaks under sinks, etc...

And you should be getting 2-3 times monthly income from a STR.....are you not asking enough? Or is this LTR tenant really willing to overpay that much?

Mike Grudzien · Answer

If you can get STR rates for LTR: Do it!

John Underwood · Answer

And you won't be having to pay for internet, water, electricity, yard maintenance  etc.

Andrew Street · Answer

Hey Marc - If the numbers are about the same, locking in a year of steady income with a solid long-term tenant could definitely be worth it especially if they’re responsible. Less turnover means less hassle, fewer cleaning fees, and more predictability. As for wear and tear, it really depends on the tenant, but generally, long-term guests treat the space more like a home, while STR guests can be rougher with frequent use. If you've vetted them well, it sounds like a smart move.

Andrew Steffens · Answer

I think it depends on a few things.  If net income were identical based on self managing both the easy answer is LTR, with 2 caveats I can think of.  There are tax advantages of STR, the question is do you plan to take advantage of them and how much will they benefit you?  Second is any potential for personal use.  Do you see you or your friends/family getting any personal enjoyment of the property?

Adam Bartomeo · Answer

Its a no brainer... go with the annual renter. Less turnover, wear and tear, and more money in your pocket.

Arman Ahmed · Answer

@Marc Shin

Hey Marc — great question. If the long-term rent matches what you’re making on the short-term side and the tenant is solid, locking in a year of guaranteed income could definitely be worth it—especially if you’re looking for less active management.

In my experience, short-term guests cause more frequent turnover wear (like scuffed walls, lost utensils, etc.), while long-term tenants might cause more lived-in wear (like flooring, appliances, etc.), but it really depends on the person. If this tenant seems responsible and your unit is in good shape, it could be a nice move toward stability without sacrificing income.

What’s your long-term goal with the property—passive income, appreciation, or flexibility

Marc Shin · Answer

@Bruce Woodruff it's one side of a duplex, and this side is not performing that well.  Probably because of the location is C+/B-.  And then I have a STR property manager who takes about a 30% cut after all is said and done.  So the STR income is going to be about the same as the LTR income.

Bruce Woodruff · Answer

Got it.Yeah, sounds like it would be better suited to be a STR. I would just recommend doing regular inspections. Quarterly maybe? Check smoke alarms, furnace filters, etc.....

Jules Aton · Answer

In my experience long term tenants are generally way less work than STR. Usually the income from STR is better.

convert short term rental to long term rental?

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