Long-Term vs. Short-Term Rentals: What You Need to Know

When investing in real estate for vacation rental purposes, owners have to decide what they want to do with their new home.

Many factors can help owners and managers weigh up whether they should opt for long or short-term vacation rentals. Most of the time, this decision is made easily and depends on the nature of your property itself and what you want to achieve. There are, however, several advantages and disadvantages to these two rental strategies.

If you need help deciding whether short or long-term renting will suit your home best, you’re in safe hands. Sit tight while we outline the pros and cons of both types of vacation rental strategies and how you should market each one accordingly.

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What is a short-term vacation rental?

Before anything else, let’s familiarize ourselves with the definition of a short-term rental.

A short-term rental (commonly referred to as a vacation rental), is the leasing out of a furnished property on a short-term basis. Depending on the owner, rental location and many other factors, these properties are rented by the week or by the night.

Many owners of short-term vacation rentals rent their property for the majority of the year when they are not using it themselves.

They have become a hugely popular alternative to hotels in the last 20 or so years, most notably with the surge of sharing economy websites such as HomeAway, Airbnb and Vrbo.

Advantages of short-term vacation rentals

While long-term rentals offer consistent income and are generally easier to manage, there are several advantages to consider for a short-term rental instead:

1. Higher rental income potential

Not only can you set fluctuating rates depending on your area’s high and low season, but you can also set a minimum length of stay for your most popular times of year to ensure you receive maximum profits.

2. More flexibility

For owners who rent their properties short-term, there is a lot more flexibility involved for you and yours. You can specifically block off calendar periods that you want to keep free for your personal use without inconveniencing anyone.

3. Less wear and tear

In general, vacation rental contract lengths range from a few days to a few weeks maximum. Receiving guests in short bursts like these ensure that guests are simply visiting your property, and so won’t be thinking about redecorating or rearranging furniture.

Short-term vacation rental

4. Tax breaks and deductions

Many vacation rental owners are entitled to certain tax breaks or even deductible property expenses because the property isn’t being let long term. Be sure to check your local authority’s rules and regulations on this.

5. Contribute to the sharing economy

We hear a lot these days about the sharing economy and its positive effects on wider society. By letting your property short-term to vacationers, you’re showing that you’re an innovator who is helping contribute to this modern way of living and thinking.

6. Automate property management 

Advancements in technology such as smart apps or smart locks, have made it easier to manage vacation rentals even if you don’t live nearby.

Challenges of short-term vacation rentals

When managing a vacation rental, you will have to consider looking into local laws, property maintenance and slow seasons.

1. More maintenance and upgrades

When your business is vacation rentals, you need to maintain a great general upkeep of the property or you could receive some negative reviews. Not only does this include things such as regular cleaning, maintenance such as drain unclogging and paint fixes, it also takes into account changing technologies and modern inventions. You’ll need to update your rental amenities every so often to include all the essentials and more for a pleasant stay – and this can come with a hefty price tag.

2. Not guaranteed income

One frustration many vacation rental owners face is the effect of seasonality on their business. While their high season is fully booked, off-peak bookings are scarce which can ultimately cause them to lose money. While rates can be adjusted to compensate for this seasonality (cheap deals off-peak and more expensive during peak times), income and bookings are not always guaranteed.

Dining room short-term rental

3. Competition from surrounding properties

Unlike the housing market, whereby apartments and houses are swamped with interest by renters, the vacation rental or short-term market sees many more homes listed than travelers searching. This may put some owners at a disadvantage (again, depending on location and availability) because competition for vacation rentals could be rife in your area.

4. Too many things to manage

While for some owners, vacation rentals are a retirement hobby-turned-vocation, for others they’re a full-time job. There are plenty of tasks to keep you occupied throughout every guest’s stay. From ensuring calendar availability is correct to facilitate a smooth booking process, plus a simple and easy check-in and check-out, and not to mention cleaners, gardeners and the rest – vacation rentals can be hard work if you don’t have the right tools.

How to market your short-term vacation rental

The way you communicate and advertise your vacation rental might be vastly different when it comes to the time frame you’re looking to target. If you mainly cater to weekenders and one-day stays your message is going to be different than a host that is aiming for monthly stays. So how can you attract the right crowd to your short-term vacation rental?

Make it clear in your listing description

Many hosts are live-in, meaning that their vacation rental is also their primary home. With that said, a lot of these owners opt for a quiet week without many bookings and host the majority of their stays during the weekend. If you fall into this category, it might be best to state it clearly in your listing description.

 Having something like, “Cozy Cape Cod Cottage Perfect for a Weekend Escape” lets guests know right away what type of trip your vacation rental caters to. Adding any verbiage surrounding short-term rentals, overnight stays, or weekend trips in your listing description communicates to guests that your vacation rental is perfect for a short-term getaway.

Offer promo codes on your website

Some vacation rental owners find that it’s actually more cost-effective or convenient to host for short periods of time only, depending on the circumstances. If this is the case, then you’ll want to entice your guests to book for only a short-term vacation. The best way to do that? Promos on your vacation rental website of course!

 Promotions, discount codes, and special offers allow guests to feel like they’re getting a good deal on their stay. Further, they’re more likely to accommodate your calendar needs if the promotion has a good enough appeal. 

Email marketing

If you’ve already established a good subscriber base for email marketing and other communications, you can use this as a means to advertise your short-term rental. Just like offering a promotion code on your website, you can send varying offers via email to your email subscribers. 

Lodgify makes email marketing easy by integrating with Mailchimp to tackle all your email marketing needs. You can target specific audiences, run tests, and track the performance of email marketing campaigns by using this integration. 

What is a long-term rental?

Unlike short-term vacation rentals, long-term accommodation typically refers to that which is leased for periods of one month or longer. Whether it’s an entire home or just one room for rent, in general, renters pay the homeowner each month and typically take care of other expenses such as utility bills.

Advantages of long-term rentals

There are certain advantages of investing in long-term properties; here are a few of the major advantages:

1. Consistent income

One of the key advantages of renting your property on a long-term basis is knowing that you have a monthly rental income that you can rely on. This can help take the pressure off new homeowners who have a lot of other expenses to worry about. Additionally, long-term renters are generally responsible for paying monthly and quarterly utility bills for electricity, gas, water and even the internet.

2. Easier to manage

Whether you choose to hire a property manager or manage the property yourself, it will require less time than a short-term rental. You don’t have to promote the rental property as much, tackle frequent rental turnover or make sure it’s ready to rent.

3. Less turnover

If you’re renting to long-term guests, you’ll find you’ll have less to worry about when it comes to administrative tasks such as paperwork, key handover, and even marketing. Once your renter signs the lease, you know how long (to a certain extent) you can expect them to stay. You only need to worry about filling the house again once you know it will be vacated.

Long term rental property

4. There may be no need to furnish

Some (though not all) long-term guests come with their furniture in tow. This can make the decision easy if you’re thinking about leasing your unfurnished property. Not only will you have a guaranteed monthly rent payment coming in, but you also won’t need to fork out on new furnishings for your home.

5. You can charge a high-security deposit

If you’re worried about the finer details of renting, such as insurance, rental agreements and security deposits, then there’s no need to panic. For long-term rentals, you can usually charge quite a high-security deposit, which will be returned to the guest at the end of the tenancy unless in case of property damage. These deposits can give owners a lot of peace of mind when it comes to renting out their properties.

Challenges of long-term vacation rentals

Some of the challenges worth noting are less earning potential and higher occupancy rates. Some other cons include:

1. Less earning potential

Vacation rental properties that are rented over a longer period of time are usually discounted by as much as 40%. Charging premium rates for peak season are not always feasible.

2. The owner has less flexibility

Unfortunately, in the world of long-term rentals, there are no spontaneous trips to your mountain lodge or July 4th getaway to your beach hut for celebrations. If you have a tenant in your home, you can’t ask them to leave for a weekend here and there. This can be a huge turnoff for many owners who are renting out their property simply to gain some extra income in the months and weeks it’s not used.

Less control over your rental property

3. Less control over the property

Most of the time, nothing goes wrong during a rental stay. There is, however, a big difference between the short-term and long-term options when it comes to checking up on your property.

For short-term rentals, owners benefit from being able to inspect the property between each guest, to check everything is in working order and that nothing is broken or damaged. For long-term rentals, however, it’s a bit more complicated. You would likely have to give considerable notice (from 24 hours to one week) before dropping by for routine maintenance and security checks.

4. Restrictions in your neighborhood/city

Depending on your property type and it’s location, there will be different laws, restrictions and licenses you need to take into account before leasing it out long term, which can often be stricter and more costly than short term renting.

5. The lengthy process to find the right tenant

When someone is going to stay in your home for a long time, you want to make sure they’re a good fit. But when you consider the time you’ll spend vetting and checking references before drawing up the contract, this can soon turn into a very long process. In contrast, for short-term renting it’s generally a much easier process – especially with tools like instant booking.

How to market your long-term vacation rental

Your marketing efforts might look a bit different if you’re focusing on long-term only stays. Given all the benefits that a long-term vacation rental has to offer, it’s no wonder more and more hosts are choosing to target this audience! Further, with its rising popularity, it’s never been easier to market a long-term vacation rental and get the exact results you’re hoping to achieve.

Target groups that are more likely to book longer

You’ve got many different travel groups to appeal to. More traditional, 9-5 travelers might not be opting for a month-long stay, while a digital nomad or workcationer will. Make sure you’re setting your focus on a group that’s going to buy into what you’re selling. There are numerous options for marketing to a specific target group. Running social media campaigns on platforms like Instagram or Facebook might give your property higher visibility to potential guests, for example.

Highlight the features perfect for a long-term traveler

The needs of a long-term traveler might be vastly different than a short-term guest. Consider what might be important for a weekend trip versus a month long-stay. Long-term guests might be more interested in amenities and highlights that mirror that of their own homes such as ample storage space, a workable kitchen, and really comfortable beds. Consider these top features when taking your vacation rental photos and deciding which ones to have for your featured images. 

Use referrals

Long-term rentals might be a harder market to tap into. There are far more people that travel for a weekend than a month. Guests who stay for long periods of time tend to know other travelers who do the same. Rather than casting such a wide net and marketing everywhere, reach inside your own guest base for marketing.

Offer referral discounts or commissions for long-term guests who refer other travelers who stay for at least two weeks. Not only are these existing customers in good contact with other like-minded travelers, but it’s also a minimal-cost way for you to promote your long-term rental business.

Long-term rentals on OTAs

It’s one thing to advertise a long-term rental on your own website, where you have all the freedom and flexibility to list your property, but it’s a whole other matter when it comes to online travel agencies, (also called OTAs). Listing sites only allow you a certain range of freedom for communicating and advertising your listing, which can be a challenge in and of itself. Further, some listing platforms have restrictions on long-term listings. Find out which platform is best for your long-term vacation rental business. 

Can you list long-term rentals on Airbnb?

As the world of travel has shifted over the past couple of years, due to the pandemic and flexibility of work and living locations, more and more people are opting to stay in vacation rentals for longer. Airbnb is well aware of this and has adapted its listing site to accommodate both short and long-term vacation rental needs.

Monthly vacation rentals

Airbnb now has the option of searching specifically for long-term accommodations under their “places to stay” feature. Vacation rentals that offer the option of booking for a minimum of 28 days will appear under this tab. It’s also noted as an amenity as “suitable for longer stays.” Not only does Airbnb allow long-term vacation rentals, they actually help to positively position them for potential guests.

Airbnb vs long term rental

Airbnb does offer long-term stay options on its own site, but you might be more inclined to book guests directly through your website. Beyond OTA fees, Airbnb also allows for payment installments for long-term stays, rather than an upfront payment like short-term bookings. This means you’ll need to have a thorough guest screening process if you’re planning to take most of your long-term bookings through Airbnb to avoid travelers defaulting on their payments.

Alternatively, if you use your own long-term vacation rental website you can set your own payment terms. If you want guests to pay in full upfront or prefer to use a particular payment method then it can be decided on your own terms.

Does Vrbo list long-term rentals?

One of Vrbo’s main requirements is for a property to be rented in its entirety, meaning no single rooms or shared spaces are available on this platform. Many of the guests who use Vrbo as their main OTA know this and might be more interested in booking for a longer period of time rather than a shorter, cheaper stay.

Vrbo allows you to set minimum and maximum night stays so if you want your property to only be included in long-term vacation rental searches, you might want to change your settings in Vrbo to only attract long-term stays.

Listing a long-term rental on Booking.com

Due to the growing demand for long-term stays, Booking.com started offering monthly and weekly rate options as of September 2020. Their monthly rental plan requires hosts to set a minimum night stay of 28 days for monthly reservations and their weekly plan is for a minimum of seven days. All property types are eligible for these rental rate plans.

Vacation rental vs long term rental investment

If you’re in the beginning stages of making your vacation rental investment, you might be wondering whether the property is better suited as a vacation rental or a long-term rental. A long-term vacation rental is not the same as a traditional long-term rental. There are a couple of key differences to note.

Listing sites

For long-term rentals that are intended to host tenants rather than guests, you won’t be able to list your property on any OTAs. 

Rental agreements

If you’re planning to host long-term stays for tenants instead of renting for vacation purposes, the paperwork is going to look a bit different. Instead of a vacation rental agreement, you’ll have a lease where you’ll include the terms of stay. 

Difference in rates

Just like you can’t have a varying daily rate for a long-term vacation rental, you certainly can’t have a varying rate for long-term rentals. Long-term rental rates are typically priced month to month and are baked into the lease agreement. You might have more room for profit with a long-term vacation rental than you would with a standard long-term rental property.

Even when you consider location, seasonality, and property type, most owners find that using their investment property as a vacation rental is their best option. The opportunity to make a profit for the amount of labor required is significantly more beneficial than renting to tenants, for most cases. 

Short-term rental vs long-term rental tax

One of the biggest questions that arise is how the taxes and fees will differ for short-term vs long-term vacation rentals. If you’re trying to maximize your profits and get hit with a large tax bill at the end of a stay, is it really worth it to host longer stays?

Both long-term and short-term vacation rentals are eligible for their own tax deductions. In the U.S., some vacation rental businesses are taxed based on the number of days the property is used as a vacation rental, so it might not make much of a difference whether you host long-term or short-term stays if your property meets the threshold in either case. Read up on more vacation rental tax rules to make the best decision for your length of stay.

What’s the best option for you?

There’s no perfect answer for everyone because what sounds like a con for you, may be a pro for others.

However, the biggest differentiating factor between long and short-term rentals is earning power. What’s more, according to The Telegraph, short-term rentals can bring about 30% higher profits than long-term rentals.

Studies have shown that the same rental property that would bring $1,000 a month as a long-term rental, can make three times more when rented out to several guests in short term rents. So you could potentially make up to $24,000 more a year with the same property!

Short-term rentals require more overseeing, but the additional revenue is worth the investment, especially with the right vacation rental software to automate your tasks. Short-term renting is a great option to bring more income and flexibility, while at the same time contributing to the collaborative economy, getting to know guests from all over the world and taking advantage of tax breaks.

Overall, there are plenty of benefits to both long and short-term renting, which go above and beyond those listed here. That being said, if you’re thinking about starting a vacation rental business, you’ll need a rental agreement. Download our free editable template below!

Don’t see the form to download the Rental Agreement Template? Click here.

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Show Comments (15)
  1. It makes sense that a long term rental would provide the security of a monthly income to rely on. If the property you owned was a condo vacation rental you could rent it out when you didn’t want to use it and when you did you could just go and live there yourself! It would essentially pay for itself because of the money you would make while you weren’t living there.

  2. If you are not sure you want to remain in the same location or expect future growth or are just unsure about the future of the company then a short-term renting might be the best option.

  3. I like how you said that you can block off calendar periods that you want to yourself. My grandma used to have a house she rented to people, but we were allowed to stay in it. It was a perfect balance.

  4. Short term rentals are usually based on the time length of renting a particular property. Vacation rentals are a kind of short term rental. Also, this has gone as far as even renting out for commercial properties.

  5. I liked that youo said that one thing to look for when you are trying to find someone to rent your vacation beach rental is to make sure that they are planning to rent for a long time so that you have consistency. I have been thinking about renting out my vacation beach home but I have been worried that I wouldn’t be able to find a renter. I would be sure to try to find someone who would be a long-term renter so that I wouldn’t have to worry about finding new tenants.

  6. I appreciate the idea that long-term rentals could handle a larger security deposit. My wife and I have a cabin we only visit during the summer, and we’ve wanted to rent it out during the rest of the year. The main thing holding us back was that we didn’t want to risk it getting trashed while we were gone. Hopefully, that would give us the security to trust a tenant with our cabin.

  7. I think the short term is more income generation, long term rental I guess is for steady income. I am planning to mixed my short term and long term property rentals. This way I have a steady income and higher income too.

  8. I like how you said that rental properties can set a minimum length of stay so that you have an idea of how much money you’ll make from each rental. I think this is also a great way to help people better plan their vacations. They will accommodate their whole trip to fit the schedule of a nice vacation rental.

  9. I have had both. Pre covid ( 2018) I added up the rental income and the subtraction of mortgages / taxes / house insurance/ landscaping/ etc

    The positive cash flow for 12 months vs 12 weeks was 915 vs 925 for 1 year.

    Sooooo for us the short term vacation rental is less work and the same money and we can use it more often.

  10. I like how short-term rentals are a lot more flexible. The last thing I want is to deal with a landlord that is too strict. Vacations change, especially your arrival times so the rentals need that flexibility.

  11. Thanks for explaining how vacation rental contracts last between a few days to a few weeks. I am thinking about going on vacation this summer, but I have yet to find lodging for the summer trip I am planning. I’ll start looking for a vacation rental that I can stay at for a few days.

  12. It helped when you mentioned that the leasing out of a property on a short-term basis is a short-term rental. My cousin mentioned to me last night that he is hoping to find a reliable short-term rental property for their vacation and asked if I have any idea what is the best option to do. Thanks to this informative article and I’ll be sure to tell him that they can consult a trusted short-term rental service as they can answer all his inquiries.

  13. I like how you mentioned that short-term rentals are properties that are rented by the week or by the night. My sister mentioned to me last night she is planning to have a vacation in the holidays and asked if I have any idea what is the best option to do in choosing the best place for us. Thanks to this informative article and I’ll be sure to tell her that we can try to consult a well-known vacation rentals.

  14. Short term rentals are definitely more work than a traditional long term rental, but if you know what you’re doing then they are much more profitable. Preparing for slow seasons is essential, and ensuring you have a pricing strategy will ensure you get the most of your STR.

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