If you have a full property space that you have thought about renting with a lettings agency, you may have considered listing to the short term let market over renting to a leased tenant.
It’s possible that you may still have a mortgage or other maintenance bills due at the property that you need covering or are just seeking to use it as an investment.
There are pros and cons to each renting option and these will vary depending on your situation, the outgoings you need covering, the location of the property and how hands on you wish to be.
Using a lettings agent
Without a doubt, going to an lettings agency and asking them to take over and find you a tenant is the easiest and stress-free way to let your property.
They’ll make a listing, find you a tenant, check any references, handle all the payments, take a cut through fees and deal with any property tenant issues for you so you don’t have to.
They’ll take a significant portion of any of your earnings and there will still be costs involved to you, such as general maintenance and upkeep, but you can effectively take your foot off the gas and let the property handle itself.
Whilst housing long terms tenants is a relatively hands off venture so to speak, long term rentals in themselves are open to different risks which the owner must accept.
Depending on the country and local laws, tenants may become subject to specific renters’ rights after living the property for an extended period of time and this usually happens after only a few number of months.
This means it can be hard to evict or remove a tenant should you need to. As with anything in life, there are some people who know how to work the system and learn their rights to use them for their own gain which can cause financial frustration to a landlord.
For example avoiding or refusing to pay their rent payments and still occupying the property with a refusal to leave.
With short term lets, the contracts drafted by the platforms we rent on are pretty clear and generated instantly for each booking with clear transactional contract details of the deal. As well as this, tenants don’t have the legal rights to outstay their welcome so long as they do not stay for longer than your local laws dictate.
With my property for example in it’s location, I could expect a long term tenant at current market rental prices to pay anywhere around £750-£800 a month but this is before any removal of fees.
This would cover my mortgage and a small portion of maintenance fees for the shared building it’s in. I haven’t ever sat down and worked out the exact figures, but it’s likely that I would probably have to cover small bits at my own expense and that there would be little, if any profit from this.
When you rent with a lettings agency you will have an easier time of finding a tenant who needs a long contract so getting the property lived in quickly shouldn’t be that much of an issue and many have lists of clients actively looking for new properties to move into.
You’ll also have the comfort of knowing that as long as the tenant is trustworthy and reliable with payments, the tenant signed in for an extended period of time is a steady income of money.
Using a short Term Rental platform.
With short term rentals – such as via Airbnb – I can rent for 1 night a week per month and bring home roughly £500 per month. That’s just 4 nights of occupancy in the entire month for over half what I could expect renting for the full month with traditional renting.
Renting for 8 nights, would bring in more money than if I was to rent via a lettings agent for an entire 30 days. The property is also vacant between this, which means I can live there in-between guest stays or the property isn’t being subjected to gradual wear and tear when it’s not in use.
It’s not all roses…
The downside of short term lets is that as these are temporary accommodation, they are prone to users who don’t care about their intentions for using the property – for example parties.
As the bookings are shorter, people tend not to care if they leave the house or home in a state as they won’t be staying there long before they move on.
Likewise, a guest staying in a new place won’t be familiar with the surroundings or the property and may be inclined to break something inadvertently whereas long term tenants tend to take more care when handling the place they will be staying in longer term (however this isn’t always the case with some tenants).
I do notice a significant amount of premature wear and tear within the property I rent on Airbnb caused by heavy handed guests.
Again, the short stay nature of this kind of accommodation means that you’re more likely to experience run ins with crime. Short term lets off full properties are perfect for fly by night operations such as drug dealing and prostitution which can create more problems in themselves. It’s scarily easy for shady characters to make accounts with fake identification and operate under the radar from the law.
However despite this, the reason why I like renting on short term platforms is that in most cases, any difficult guests will only be around for a short while and in theory, it shouldn’t be a long wait until they have moved on and I have the keys and my property back.
Also, I love the fact that it’s easy quick money and I like the potential to earn quite a bit of extra monthly revenue for my own bills whilst keeping the property relatively vacant for most of the month which works perfectly for my own work, lifestyle and family.
There is also the uncertainty of your expected revenue each month. Some months you’ll find you are receiving booking requests or taking bookings frequently and other times you’ll find you can go weeks without a booking or even a question about a potential reservation from an interested guest.
For example, I myself have had days previously where I’ve accepted 2 bookings in a day at a time and other periods of 2 weeks with no contact…from anyone. This is the nature of this kind of industry and you may find depending on your location and property that you may be subjected to seasonal ebbs and flows of trade.
I can see how someone who lives in their own home and need a little bit of extra income would be happy with renting their spare room out every now and again without having to give up their home and move to somewhere else and this format of partial renting is why Airbnb has grown so huge.
Don’t get me wrong, the difference in work involved between the two renting options is huge. Cleaning and hosting on Airbnb or other short term let platforms takes up a considerable amount of time and is effectively a part time job, but the rewards of it are huge considering the time you do actually end up putting in and there is room for a huge profit margin.
If I wanted to, I could easily lower my prices and rent the property full time on a short term let platform and expect around £2,000 a month. This would however, mean moving out and that doesn’t suit my situation right now, but is definitely something I would consider in the future if my situation changed.
In Summary
In my opinion, despite the pros and cons for both, for me renting via short term let platform is the way to go currently, particularly if the property you are looking to rent is your holiday home. As a landlord, you can always try short term lets and if it doesn’t work out, switch to longer term tenants later on.
Whatever you decide to do with your property, there is without any doubt a large element of risk on the landlords part that needs to be taken into account. A homeowner may find that the down payment they put into this investment is subjected to the volatility of the housing market, coupled with immediate risk of damage and destruction of property whether accidental or intentional.
Not to mention it may cost not only a fortune to maintain but may hold a lot of sentimental value which makes renting that much harder.