One of the biggest debates apartment owners face is if they rent the apartment out for a long-term lease or for a short-term, vacation rental. The immediate thought is that short term rentals are more financially beneficial because of their high per night rate, however, there are many factors that need to be taken into consideration before proceeding in this direction.
- Location – Not all locations are suitable for vacation rental apartments. Short term apartment guests mainly consist of tourists. This means, that they mostly want to be in the center close to all of the main attractions such as: easy access to public transportation, cafes, restaurants, shops, etc. If the location is not central, the apartment will then be less desirable to guests wanting to book. An example being the Arnona neighborhood. Though it is a wonderful neighborhood to live in, and relatively close to the center, because it is no central, it is not as desirable a neighborhood for short term rentals.
- Expenses – It is customary for long term rentals that the tenant take care of paying all the bills for the apartment, such as: Arnona, Vaad Bayit, water, gas, electricity, cable, and internet. With the vacation rentals, the owner is responsible to cover all these expenses including the management fee (if decided to choose a management company to take care of all of this) True, the owner does not have to hire a management company, however, then the owner will be responsible for all the work involved when renting the apartment out short term.
- Wear and tear – When people are constantly moving in and out of the apartment, the wear and tare of the apartment is much greater.
- The apartment must be fully equipped and furnished when renting short term. This means that everything from the furniture, to the linen and towels, to the kitchen appliances and utensils must be provided in the apartment. This is part of the service of the short-term rental system, and what the guests expect.
- Size of the apartment – apartments that range from a studio to 1 or 2 bedrooms, tend to rent more frequently as they are closer to the size of a hotel, and can be enough for most guests looking to rent short term rentals. Apartments with 3 or 4 bedrooms, and don’t get rented as frequently
- Occupancy rate – Though it is correct that short term rentals can have a high per night rate, not every night is rented throughout the year. This means that there is never 100% occupancy in the apartment. A yearly occupancy rate of 50-70% is considered a success in the vacation rental world, however, this cannot be guaranteed. According to these odds and figures, though the rate per night may be higher, it may not calculate out that way in the end. Whereas a long-term rental, the apartment is rented out, and the rents is being received every month even if the tenant decides to go way for 2 weeks.
- Personal use of the apartment throughout the year when visiting, cannot rent for long-term, in this case, you would need to rent it for short term. However, if you have no use of the apartment at all throughout the year, then long-term rental wuld work.
As you can see, it is quite important to consider all the above factors when deciding to rent your apartment for short or long term. Whatever it is that you decide, feel free to contact us here at Alon Central as we can and are happy to assist with whatever direction you choose to go.