Is short-term rental profitable?
When offering an apartment for rent, owners adopt one of two basic strategies. Most people choose long-term rental, offering their place to students or to people without a home of their own. Others offer the apartment as a short-term rental, on terms similar to a hotel. The second strategy has its advantages, which are worth considering before listing. In the final reckoning, is short-term rental profitable?
Short-term rental – why is it so popular?
In recent years, short-term rental has grown in strength among private individuals, becoming real competition for hotels. Private rental means making a vacant unit available for a short period, usually no longer than a month. It is a great option for travelers who, on the one hand, are looking for accommodation and, on the other, don't want to stay in hotels. However, travel is not the only reason to look for a short-term rental apartment. Having to attend a medical procedure, going to an arts or sports event – these are just examples of situations in which short-term rental comes in handy. Keep in mind that there are two perspectives – that of the tenant, i.e. the traveler, and that of the landlord, i.e. the host. Some people rule out short-term rental for their apartment from the start, considering it not profitable enough. But is long-term rental really better and more profitable than short-term rental? Let's look at the pros and cons of this option!
Advantages of short-term rental
The key argument in favor of short-term rental is significantly higher profits than with long-term rental. A studio apartment in the center of Wrocław rented long-term brings in revenue of around PLN 3,500. The same studio can successfully be rented by the night for PLN 390-450. So it is enough for the unit to be rented for 9 days a month to generate higher profit. It is also worth keeping an eye on seasonal price increases, for example during the summer holidays, long weekends or cultural and sports events in the area. This lets you multiply your profits – with Bookable's features you can conveniently raise prices by 20-35% during peak periods. Another important plus is the lower risk of dishonest tenants who decide to occupy the apartment. Problems with unwanted tenants who don't pay their bills are unfortunately commonplace in long-term rental. A frequently highlighted advantage is also the great flexibility of the rental. This applies when the owner lives in another city and the property itself is located in a region attractive to tourists.
Disadvantages of short-term rental
There is no denying that short-term rental requires much more involvement than long-term rental. This is the issue that most often discourages owners hoping for easy and fast passive income. Growing competition requires marketing efforts and promoting your listing on various portals. Sometimes this involves service fees or the need to buy online ads. After every guest you also have to clean, change the bedding and prepare a new welcome pack. The alternative is to delegate this task to a specialized property management company. However, they will charge anywhere from 20 to as much as 35% of the rental amount for their services. Higher turnover also means faster wear and tear on the apartment, which brings forward the inevitable renovations. In addition, short-term rental attracts certain kinds of travelers, including partygoers and organizers of bachelor or bachelorette parties. This in turn can mean worse relations with neighbors and complaints to the police or the building manager. Noisy tenants are, however, a marginal drawback insofar as any source of friction will quickly disappear – together with the end of the short-term rental.
Summary – is short-term rental profitable?
Looking only at the financial side, you can say without hesitation that short-term rental is profitable. However, you need to take a broad view and analyze all the pros and cons. It will not be a good choice for people who want money to simply flow into their account. Short-term rental requires some effort – from promoting your listing, through staying in constant contact with tenants, to cleaning after they leave. But if you are determined, organized and have free time, you can count on large profits. They exceed typical long-term rental by tens or even hundreds of percent. Besides, short-term rental gives you much more freedom. If things take a bad turn, you can always move into the apartment overnight.
