SHORT TERM VS LONG TERM RENTALS IN DUBAI

Short-Term vs Long-Term Rentals

Over the past few years, there has been a lot of excitement about owning a short-term rental as part of an investment portfolio. This marks a dramatic change from the traditional long-term rental model. As more travelers utilize vacation rentals instead of hotel chains for their trips, you may be wondering if owning a short-term rental may be the right situation for your needs.

Short-term rentals have caused a stir in many communities. Many full-time homeowners do not like having these properties in their neighborhood. Unruly vacationers often bring a party atmosphere to their quiet streets and some cities have banned them completely. In other areas, they are severely restricted in their use.

Another consideration is the amount of time a short-term rental will take to manage. Unlike their long-term counterparts, short-term rentals often require more repairs and maintenance as the tenants do not treat these properties as their homes, as long-term tenants do. Short-term rentals also require someone to be available 24/7 to address any needs of the guests. Of course, you can hire a property management company to handle these issues, but that will cut into profits and average 20%-30% of rents.

Short-term rentals can have a larger return on investment than long-term rentals, but they come with more work. They also have significantly higher vacancy rates, advertising costs, cleaning, and maintenance costs. On the other hand, having a vacation property you can enjoy yourself may tip the scale. There is no one-size-fits-all approach to real estate investing. Consider what works for you and make the best choice for your goals.

Short-Term vs Long-Term Rentals: Why Less Can Earn You More

The short-term property rental sector is blowing up and leaving lots of homeowners and property managers scratching their heads wondering why so many people are willing to deal with the headache.

Renting short-term is, no doubt, a ton of work. With new guests coming in and out all the time, a (hopefully) constant stream of inquiries to address and regular cleaning and preparation tasks, it may seem like a no-brainer to choose the much more hands-off option of long-term renting.

In truth, however, both options present their own unique challenges and rewards, and all property managers need to be aware of that before deciding which route to take.

First of all, while short-stay rentals can often be reserved by their owners for a visit here and there, allowing them to enjoy the accommodations when they like and profit from them the rest of the year, long-term rental arrangements obviously don’t provide that luxury.

As numerous research have shown, short-term rentals can bring in around 20% higher profits than long-term lets. But the potential is greater than even that. The same property that can bring in $1,000 dollars a month when rented long-term, can yield as much as $3,000 dollars when rented out to a collection of guests in short spurts.

Short-term property rentals inherently require more frequent involvement, but the extra profit is well worth the investment, especially with so many effective tools out there to automate your tasks and make the entire management process smoother.

SHORT TERM VS LONG TERM RENTALS IN DUBAI

A real estate investor who buys a property for rental has options of leasing the property for the short-term or for more than one year in Dubai.

Short-term rental is when a property is leased for 90 days or less.

Long-term rental is when a tenant has a lease that is one year or longer.

However, deciding on which terms to lease your investment property can be challenging. Below are some of the factors to consider to help you make an informed decision.

RETURNS
A short-term lease offers a much higher return than a long-term lease. Guests always pay a higher rental than long-term tenants. The fee depends on the location, the size, and the type of home. The only disadvantage of short-term leases is that occupancy is not guaranteed hence inconsistent income.

Long-term leases give you a guarantee of a stable source of income. However, you are unable to increase the rent to reflect market changes such as during festive periods or major events in your city because of the contractual agreement. Short-term leases can yield an increased return to reflect an increase in demand at different times of the year.

CASH FLOW
Cash flow from short-term leases varies due to seasonality. The law of economics – supply and demand applies more in short-term rentals than long-term rentals. In popular vacation areas, the short-term property can even fetch much more.

In a long-term agreement, it can take time to find an appropriate tenant. This could leave you without an income for some time if there are contract gaps.

FLEXIBILITY
Renting out a property short-term offers flexibility. As an owner, you can always have the property for personal use and rent it out to guests when you wish. Also, you can always switch to long-term or sell the property with limited notice.

With a long-term contract, there is no flexibility. Once there is a contractual agreement for a period, you will not be able to legally do anything with your property for that particular period. In Dubai, notice of termination of a long-term lease by the landlord if he wishes to sell the property or move into it himself must be given one year in advance.

MANAGEMENT
Long-term rentals require less attention. There is less frequent turnover of tenants hence less cost associated with property management and the advertising of the property to keep it occupied.

MAINTENANCE
Short-term rentals receive increased maintenance than long-term rentals because of the frequent tenant turnover. With long-term rentals, the better part of regular maintenance will be the tenant’s responsibility. They have less wear and tear because tenants tend to take care of the property as if it’s their own rather than a hotel room.

CONCLUSION
The two investment models have their own pros and cons. The decision depends on how the property investor feels about the risk and reward of the higher income potential versus the lower risk of a steady income.

Hope this post (on SHORT TERM VS LONG TERM RENTALS IN DUBAI) helps?

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