Rental properties are, without a doubt, one of the most beneficial assets that you can add to your investment portfolio. When it comes to rental properties, there are generally two distinctions, short-term and long-term. Long-term rental properties are used for housing with the tenants staying for over one month. Short-term rental properties are typically used for vacations or as an Airbnb and have tenants stay anywhere from one night to under one month. When you are considering investing in a rental property, you must first decide which type is right for you. By going over the important aspects of each, you will be better suited to decide if short-term or long-term rental properties in Maryland are right for you.
Any investment’s main purpose is to earn a profit, so we will begin by breaking down the financial aspects of both short and long-term rental properties.
- With long-term rental properties in Maryland, landlords will get the benefit of having a consistent and predictable income, month after month, for the duration that the property is occupied. Short-term investments do not carry the same level of predictability, however, they can potentially gross a higher income due to the ability to raise prices or charge a premium for a vacation property.
- When tenants live in your investment property for the long-term, they tend to take care of the basic day-to-day maintenance as they perceive the property as a home whereas short-term renters are typically visiting or on vacation and will not pay as much care to the property. Every time a tenant leaves the short-term investment property, the landlord must perform maintenance and cleaning which can become a constant hassle.
- Utilities are simple. In a long-term rental, the tenants will pay for the utilities and with a short-term rental, the landlord is responsible for paying for utility costs.
- While price adjustments can be made for both short and long-term rental properties, it is much easier to do with a short term due to the constant changing of tenants. Long-term price adjustments usually come at the end of the lease and tenant retention is not guaranteed should you decide to raise the rent.
Tenants are the source of income for your investment property. So, not understanding how to properly manage your tenants will prove detrimental to your property investment success.
- Tenant turnover is vastly important and in different ways for the short and long term. Long-term tenants should be carefully selected due to the extended duration of their lease. They will be living on your property and if they were good tenants, finding a replacement will be a challenge so it is best to do what you can to retain them. The case for short-term investment properties is quite the opposite. You want to get as many people in your short-term investment property as possible. This means that turnovers will consistently happen at a rapid pace. The volume of renters is much more important than the quality whereas in the long-term, the quality of the tenants is the most crucial aspect.
- Advertising greatly influences the number of people who are interested in your property. For short-term rentals, advertising will allow you to host a greater quantity of renters and increase your profit. Advertising for a long-term rental property in Maryland will grant you a wider selection of potential tenants to choose from. While the desired results differ, advertising is an important aspect of both types of rental properties.
- Tenant management differs greatly between the two types of rental properties. Long-term tenants are typically easier to manage simply because there are fewer of them, their stay is longer and a relationship can be established. With constant turnovers, tenant management for short-term rentals requires constant attention to proficiently facilitate.
When selecting a long-term investment property in Maryland, try to look for one that would make a good home for your tenants. A short-term rental should be more orientated towards short stays for vacations. Each has its own set of benefits that should be considered before purchasing the property.
Local Laws and Regulations
- Local laws and regulations mainly apply to short-term property investments. With these properties typically being located in tourism-oriented areas, local laws are normally in place that regulate the number of rental properties in the area and how much they can cost. This is because these areas want to keep affordable housing for the locals. Be sure to do an adequate amount of research into this topic before deciding on an area for your investment property.
- Again, personal use applies to short-term investment properties. While long-term rental properties have tenants staying for long durations, short-term properties have the benefit of being used for personal use. If your property is located in an area that is used for vacation, you can book yourself a stay whenever you want.
Properly Manage Rental Properties in Maryland
Deciding if a long-term or short-term rental property is right for you is a personal decision that differs depending on the type of work you enjoy. If you enjoy being active in your rental property and wish to have it for personal use, a short-term rental property might suit you better. If you would rather have a more predictable income from your rental property, a long-term rental would be a better option. Regardless of which type of rental property you chose, it is one of the best investments you can make. If you would rather just enjoy the profits and avoid the property management workload, Premier Property Management is your solution! Our experts will proficiently manage your investment and ensure that every part of the process is handled with a high degree of professionalism. Call or contact us today to find out more about how Premier can help you expertly manage your property.