Are you going to invest in long-term or short-term rental properties? This is one of the first decisions you make as a real estate investor. While there are pros and cons to each type, here’s a breakdown to help you decide which is better for your investment goals.
Long Term Rental Properties
Well, the name pretty much gives it away! Places that are leased for months and even years at a time are considered long term rentals. These properties are commonly unfurnished and the Residential Tenancies Act applies.
1. Easy to manage
Once the property is occupied and all the agreements are signed, the property manager’s job is mostly hands-off with the exception of the occasional landlord repair or maintenance duty.
2. Consistent income
As soon as the property lease is signed, you are locked in with consistent income for the duration of the contract. Who doesn’t love a steady paycheck from their investments?
1. Long upfront process
Since the tenant will be living in the property for an extended period of time, you want to make sure you choose the right tenant, which can sometimes take a long time. Not to mention the marketing efforts required to get your property seen and in demand.
2. Contract and price locked
While being locked in a contract and price has its advantages, it can also be a setback. If you end up having a difficult relationship with the tenant or if surrounding properties are charging higher rent for a similar place, it’s not as flexible as short term rentals.
Short Term Rental Properties
Think vacation homes, like anything listed on AirBnB or VRBO – these are all considered short term rentals. Because they are often used in the same way that hotels are, they are usually furnished and have supplied amenities to make the renters stay as pleasant as possible.
1. Inspected on a weekly basis
As the property is inspected and thoroughly cleaned between each stay, consistent cleaning and inspections ensure that your investment is well-kept and any problems are fixed before they turn into a bigger or more expensive bill.
2. Pricing flexibility
Know that your area is in higher demand over the Christmas holiday or that April is super quiet and you just want to book it out? Well, you are able to increase and decrease nightly or weekly rates to meet the demand!
1. High turnover
With new guests every few weeks or even days, this high turnover means more work overall. You’ll have more tenants to juggle, more cleaning duties and more responsibilities to make sure your investment property is ready for the next guests.
2. More marketing efforts
To go along with the high turnover is the stress of making sure that your property is being seen, rented and in demand. This means knowing what has to be done to really sell the place to have guests choose your property over others.
Which one is better for you?
There are pros and cons to each style of rental and you have to decide which one is better for your investment goals and lifestyle. Also, be sure to take a good look at how your property would perform as each type. A lakeside condo in a vacation town might do better as a short term rental and an entire home in the suburbs of the city might do better as a long term rental.
Are you interested in real estate investing but don’t know where to start? Or maybe you already have a few properties and need help with the overall process? We can help! Get in touch with us today!
Every property manager wants their property to be occupied. But, every property manager’s dream is to have their properties occupied with tenants that are reliable, pay their rent on time, and treat the rented space with respect and care. We know ideal tenants are hard to come by, but with this guide to tenant screening, you can make sure that you sort the good prospective tenants from the bad. Here’s a list of 5 things you should do when looking for a new renter!
1. Make a Checklist
The first step is to make a checklist of tenant non-negotiables. Do you have a minimum amount of time for the lease agreement? How many months of rent payments are you requiring upfront? These should be personalized to your standards. If you own multiple properties, some might need their own custom checklist. Are some buildings not pet-friendly, or is it an adults-only building? These extra custom lists come more into play with apartments or buildings with multiple occupants, but they are important to create before you look for renters.
2. Create a Pre-Screening Application
Since in-person meetings take up time and effort by yourself or your property managers, it’s a good idea to have a thorough pre-screening application for tenants to fill out beforehand. Now is a good time to request income information or a credit report to ensure that they will be able to meet rent payments. At HamiltonHomesforRent.com, our online application requires a photo ID and proof of income, but everyone does it slightly differently.
3. Request a Criminal Record Check
Requesting a criminal record check can help with that peace of mind for the owner and other tenants if there are multiple renters in one home. You have to be careful with this step though – permission for the police check must be requested first and you cannot refuse tenancy solely on this report alone. However, this extra step can ensure that the prospective tenant is not currently involved in criminal activity that can harm others and your property.
4. Collect References
Just like they do for new hires at a job, you want to look at what past employers have to say about this person. Ideally, your renter has had past landlords but if not, employment references also do the trick. Give these references a call or request a reference letter to get to know a little more about the prospective tenant. Again, this step helps to ensure you are choosing a responsible and trustworthy tenant to live in your property.
5. Meet in Person
After they have passed all the previous steps in this guide, the last step is to meet in person for a viewing. While they browse the home, be sure to talk and get to know them a little more. Here are some example questions you can ask:
- Do you have any pets?
- Where are you moving from?
- How long do you plan on staying in this area?
Talking in person will provide a good read on the type of tenant they will be, so be sure to ask questions to build rapport and make sure that everything they stated in the application is true.
With these 5 tenant screening steps, you can smooth this often overwhelming process – especially with loads of applications to sift through! Following this guide will decrease your tenancy turnover rates, save you time in the long run, and lead to lasting relationships with your tenants. Need help managing this process? That’s our speciality! Get in touch with us today!