Short-term rental vs. Traditional rental

Many owners looking to rent out their home are faced with the choice between short-term rental and traditional rental. Both options have advantages and disadvantages, and in this article we will analyze the differences between them.

Let's start by defining short-term rental. This type of rental differs from traditional rental as it is based on temporary contracts, usually not exceeding 30 days, stipulated between private individuals. Online Travel Agencies (OTAs) have made short-term rental very popular in recent years. However, it is important to fully understand the implications of this choice before making a decision.

As for traditional renting, it is a long-term contract where tenants are responsible for the tenancy for an extended period, offering some peace of mind regarding the continuity of rents. However, it is important to note that earnings may be lower than renting in the short term.

Advantages of short-term rent:

  1. Flexibility: Short-term renting offers greater flexibility than traditional renting as you can manage the use of the property according to your personal needs. 
  2. Potential higher earnings: One of the main advantages of short-term renting is the higher earning potential compared to traditional renting. Typically, you can get 20% to 30% more earnings.
  3. Guaranteed payment: Guests pay in advance through OTAs, ensuring they receive payment for reservations made.
  4. Global visibility: OTAs offer global visibility of the tourist location. This means guests from all over the world can view and book the property, increasing your chances of having a consistent booking.
  5. Lower wear and tear on the property: Because guests stay shorter periods than long-term tenants, general wear and tear on the property, such as wear and tear on furnishings and appliances, tends to be less. This can translate into lower maintenance costs in the long term and a longer life of the internal and external elements of the property.

Disadvantages of short-term rent:

  1. Intensive management: Short-term rental requires more active management than traditional rental. This includes managing reservations, interacting with guests, cleaning the apartment between guests and constantly maintaining the property to ensure it is always in tip-top condition. 
  2. Uncertainty of reservations: Short-term rental leads to reservation uncertainty. You may experience periods of low occupancy where your property remains empty, impacting your earnings. It's important to consider your market's seasonality and tourism demand to gauge the level of bookings you can expect.
  3. Local regulations: In some cities and towns, short-term rental is subject to specific regulations that must be followed to avoid legal problems. These regulations may include limitations on the number of rental days allowed or the requirement to register the property with local authorities.

To address these challenges related to short-term rental, it is possible to rely on sector professionals, the Property Managers, who will be able to manage the property comprehensively, ensuring full compliance with the laws and maximizing occupancy. .

Pros and cons of traditional rent:
Tenants usually sign long-term contracts, ensuring continuity of rents and some peace of mind for owners. Additionally, traditional rental management requires less time and energy than short-term rental, as there is less tenant turnover.
However, traditional renting may generate lower earnings than short-term renting. Furthermore, the owners do not have direct control over the use of their property, since the tenant has the right to use it for the period established in the contract.

In conclusion, the choice between short-term rental and traditional rental depends on your personal needs and preferences. Short-term renting offers greater earning potential and flexibility, but requires more active management. On the other hand, traditional renting offers stability but may generate lower earnings.
To make an informed decision it is important to carefully weigh the pros and cons, as well as take local laws and financial factors into consideration.