Which of these is better – Short-term rentals vs long-term rentals? This is a question that most property investors in Malaysia will eventually come to, when deciding how to best cope with their property loan repayments. Both ways have their own merits; short-term rentals may be more suited to some, whereas long-term rentals are more suited for another. Let’s have a look at the various pros and cons that each type of rental offers and some of the reasons why people tend to choose one over another.
The biggest attraction to short-term rentals vs long-term rentals is the higher daily room rate. This fact has become much more well-known in recent years thanks to short-term rental platforms like Airbnb. The rates are significantly higher and returns can often be double or even triple of a long-term rental. The only catch is getting your short-term rental booked out for the entire month. It’s not an easy task getting your property fully booked for a whole month, let alone fully booked month after month. You’ll need a well written description, a beautifully designed unit and consistent 5 star reviews from your guests to get those bookings, and all this requires a lot of time and effort. There are many helpful guides and many great YouTubers with great advice on how to achieve this. One great channel to follow is Richard Fertig’s – Short Term Rental Secrets.
Interestingly enough, you can expect to match your monthly income from a long-term rental with just about 10 – 12 days of bookings per month only. So why isn’t everyone on Airbnb then? Well, it takes a significant amount of work to manage a short-term rental as compared to a long-term rental. As a host, you’ll need to manage check-in and check-outs as well as cleaning and maintenance on a regular basis. The more booked out your property is, the more work you’re going to have to put in. Not everyone has the time or patience to manage a short-term rental and prefer instead to just have a property agent find a long-term tenant who will commit to a year of stay, which pretty much makes the whole thing hands-free.
There’s also no need to worry about furnishing or interior design of the property on a long-term lease as many a time, you can get a tenant to move into an empty space. This means that there’s no need for an initial investment on furniture or amenities for the tenant other than the basics, which will come up to RM 10,000 at the very least. This added expense can deter a lot of property owners from going the short-term rental route. Owners who do have the additional cash to spare however, will find though that this initial up-front cost can make them a lot more money in the long run.
Another benefit that short-term rentals vs long-term rentals have is payment. If you’ve ever rented out a property before you’d know that tenants don’t always pay on time and in extremely bad cases, you have to end up chasing them for rent. This issue is completely removed in the case of short-term rentals because the Airbnb platform will only confirm the booking from a guest once payment has been made. This means that you get paid before your guest has even arrived.
It really boils down to whether you have the time to manage a short-term rental. We understand that time is money, and if the time you put into managing a short-term rental is simply not worth it, the long-term option might just be for you. But, do bear in mind that the rewards can be far greater with short term rentals, especially in today’s current market where long-term rental rates are way down and the hopes of you covering your property repayments through a long-term lease are a distant dream.