Short-Term Rentals vs. Long-Term Leases: Which One’s Right for You?
April 11, 2025
6
min read
Financial Comparison of Both Models
ROI, maintenance, vacancy rate, and tax implications.
- Short-term rentals often yield higher nightly rates but come with increased costs for furnishing, cleaning, and frequent repairs.
- Long-term leases provide stable monthly income and lower turnover costs, making them more predictable.
- Tax benefits vary: short-term rentals may offer more depreciation deductions due to furnishings, while long-term leases benefit from passive activity loss deductions.
Legal and Regulatory Factors
Local zoning laws, Airbnb restrictions, and lease terms.
- Short-term rentals often face stricter regulations, including licensing requirements, occupancy limits, and zoning restrictions that vary by location.
- Long-term leases are subject to landlord-tenant laws and housing standards but typically involve fewer legal hurdles.
- Condominium or HOA rules may prohibit short-term rentals entirely, while lease agreements for long-term tenants require careful drafting to avoid disputes.
Lifestyle Flexibility and Management
Active vs. passive income and time commitment.
- Short-term rentals demand active management due to frequent guest turnover and marketing efforts but offer flexibility for personal use of the property.
- Long-term leases require less day-to-day involvement, making them ideal for investors seeking passive income.
- Property management services can help balance workload for either model but come at an additional cost.
Which Option Suits Different Types of Investors?
Case examples for new investors, retirees, and portfolio diversifiers.
- New investors may prefer long-term leases for their stability and lower risk.
- Retirees seeking passive income might benefit from long-term rentals or diversified portfolios like Delaware Statutory Trusts (DSTs).
- Experienced investors looking for high returns or seasonal flexibility might opt for short-term rentals in tourist-heavy areas.
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