You have most likely heard of short-term rental many times without even realizing it. Short-term rental is the practice of renting a property for less than 30 days. Services like Airbnb offer short-term property rentals all the time.
A short-term property rental is primarily useful to a business traveler or vacationer. It provides the comforts and conveniences of a home environment for any traveler who does not wish to stay in a busy hotel. Short-term rental may sound easy and convenient, but it has distinct advantages and disadvantages for renters and property owners.
Before you choose to stay in a short-term rental home or advertise your own home as a short-term rental, you must have a clear understanding of the pros and cons. Entering into a short-term rental blindly can have many consequences, including legal entanglements. You can review the information below to learn about what a short-term rental is and how to determine if one is right for you.
Short-Term Versus Long-Term Rental Properties
Short-term rental is defined as any rental agreement allowing a renter to stay in a privately-owned home or apartment for less than 30 days. Long-term rental properties are properties rented for at least 30 days, usually on a monthly or annual basis. In most cases, a property owner must have permission from his or her town or county to rent his or her property using either rental agreement structure. In some areas, the property owner must also purchase a permit.
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There are several differences in how short-term and long-term rental properties are managed. For example, a property owner placing his or her home for short-term rental may not be available during the rental period. The owner may rent the property for a week or two to earn extra income while away on vacation. In such an instance, the renter has no access to quick assistance for such issues as property repairs during his or her stay. However, the property owner must repair and maintain the property between rentals. If a property is used solely as an ongoing short-term rental property, it receives more frequent between-tenant maintenance and care than a long-term rental property.
Advantages and Disadvantages of Short-Term Rental for Property Owners
The biggest advantage of short-term rental for a property owner is the potential for increased profits. Short-term rentals are not always subject to the same regulations as long-term rentals, allowing a property owner to charge more per night or week to a tenant using the property for a brief stay. A property owner with a short-term rental property available in a popular city or area can increase profits substantially.
It is also possible for a landlord to charge a short-term renter more to stay in a home or apartment during a popular time of year or while a special event is taking place in the local area. A short-term rental is also advantageous for a property owner because he or she has access to tenant credit card information provided online, making it easy to collect cleaning fees and deposits. Additionally, all booking fees are automatically collected and transmitted to the property owner by the online booking service.
Despite the advantages of such an agreement, there are several disadvantages a property owner must also consider. For example, a dedicated short-term rental property requires weekly and sometimes daily maintenance between bookings. The other services a landlord must offer to keep short-term renters happy can also be expensive or time-consuming. Some of them include:
- Providing on-call maintenance personally or hiring a maintenance crew.
- Cleaning and maintaining the inside and outside of the property.
- Paying utility costs.
- Providing amenities short-term renters covet, such as Wi-Fi and on-site laundry.
- Setting up a means of communication between the landlord and each short-term tenant, such as email.
- Providing a security system for the property to ensure each short-term tenant feels secure while providing access to essential personnel.
A short-term rental property owner must also be prepared to have new strangers staying in the home or apartment all the time. There is no opportunity to build friendship or trust like there is with long-term tenants. The property owner must prepare for occasionally destructive or otherwise undesirable renters.
Advantages and Disadvantages of Short-Term Rental for Renters
One advantage of a short-term rental for the tenant is the ability to avoid staying in a hotel. In many cases, a renter can find a short-term rental at a lower cost than a hotel room. Additionally, a rental home or apartment allows the renter to have more privacy. Access to particular amenities is another common advantage. For example, a short-term rental may be geographically desirable because it is closer to certain attractions than the nearest hotel. It may also include perks not offered in a hotel, such as a full kitchen.
There are few disadvantages to a short-term renter. The most common is the potential for fraudulent advertising. The renter may arrive to find the property is not as described. In rare instances, a person who is not the property owner can also list the property as available for short-term rental. In such a case, the renter may arrive to find the property already occupied or otherwise unavailable. However, most online short-term rental services have verification and security tools in place to prevent such fraudulent listings.
Short-Term Rental and the Law
A final short-term rental consideration for renters and property owners alike is the law. The law governing short-term rentals is different in every jurisdiction. In some areas, short-term rental is not legal at all or has only recently been legalized. For example, Fairfax County, Virginia first legalized short-term rental on July 31, 2018. In areas where short-term rental is legal, a property owner may still be required to pay certain fees and taxes for short-term rental privileges. A short-term rental license is also required in some jurisdictions.
Laws governing short-term rental are not always local. In the United States, federal, state and county laws may also apply. Other countries also have multi-layered legal systems governing short-term rentals. Online services allowing the listing of short-term rentals do not always screen listing to ensure they are legal in their respective jurisdictions. Property owners must always check the laws before posting a listing. A renter must also study short-term rental laws in the geographical area of interest to avoid renting a property illegally.
Related Article: Renting a House vs. Renting an Apartment
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