Short-Term vs. Long-Term Rentals: Pros & Cons

It’s the age of Airbnb, and many Portland property owners are considering turning their homes into rentals. With COVID-19 still affecting the hospitality industry, the ability to occupy a private home rather than a room with dozens of other guests is appealing to many travelers. Increased social distancing and cheaper rates have helped keep short-term rentals competitive during the pandemic. But when you’re thinking of renting your property, it pays to consider the pros and cons of short-term vs. long-term rentals. There’s a world of difference between managing the two. And knowing which will work best with your own needs and goals will help you succeed.

Portland: A Destination City

Whether thinking of starting a short-term or long-term rental, you’ll find a market for it in Portland. Our city has it all: quirk charm, excellent food, beautiful bridges, and a rich culture. It’s no wonder that recent years have seen a surge in population and real estate value as this gem of the Pacific Northwest enjoys its time in the sun–metaphorically, at least. The area’s population increased by over 13 percent in the past decade. That’s twice the rate in the US as a whole. In that same timeframe, the cost of rent has also steadily increased, as greater demand makes the market more competitive.

Portland is an attractive place to live, but it’s also a destination on many tourists’ bucket lists. In 2019, the Portland area hosted 8.8 million overnight trips, resulting in billions of direct spending in the Portland area. A large chunk of that money went directly to the hotels and short-term rentals which hosted their stays. The travel and tourism industry has understandably experienced a setback due to COVID-19, but the area is bouncing back. Even the wear and tear of the pandemic can’t dull this city’s shine–or its appeal to visitors.

Reviewing the Pros and Cons

So, you own a property in Portland, and you want to open it up to guests–or tenants. It’s clear that Portland has what any city needs to make either a long-term or short-term rental successful. At the end of the day, the best option will depend on your property itself, as well as what you’re looking for as a manager.

Pros of a Short-Term Rental

When looking at the rates of a hotel or b&b, it quickly becomes apparent that you can charge a lot more per night for a short-term rental. The increased cash flow is a large benefit to running a short-term rental. If your property is in a location close to attractive amenities, sightseeing locations, or public transit to get around the city, your property will likely find success as a short-term rental. It also allows you more flexibility It’s far easier to block out some time to use your property for yourself than it is if you have tenants with a year-long lease. Overall, a short-term rental allows for a large amount of flexibility, the ability to charge higher rates, and more control over when and how your property is used.

Cons of a Short-Term Rental

However, operating a short-term rental also has its drawbacks. One big one is the local restrictions. In Portland, you have to go through several steps before you can think about opening your property as an Airbnb. You must obtain an accessory short-term rental permit, which requires you to occupy your home at least 270 days per year. You must also register with the transient lodging tax program so you can pay legally-owed taxes on your rental income, and then register your rental as a business. Getting approved to operate your short-term rental can be a complicated and time-consuming process.

Aside from the issues in setting up a short-term rental, actually running it can be challenging too. Though you can charge more money per night for a short-term rental, you’ll often find yourself with higher costs as well. You should expect to pay for regular cleanings, maintenance, restocking essentials, and more. Because your short-term rental is more along the lines of a hotel, you’ll need to keep it fully furnished and stocked with any supplies guests might need, from toilet paper to pots and pans. And because the short-term rental market is so competitive, you’ll want to make sure the furniture and decoration look inviting and appealing to potential guests trying to decide where to stay. By the end of the day, those costs add up.

Pros of a Long-Term Rental

Whereas a short-term rental can provide bursts of high revenue followed by long dry spells during the off-season, a long-term rental tends to be more stable, consistent, and hands-off. Signing a year-long lease means you can count on collecting rent consistently for that entire period. Though you won’t be charging as much per day, you can collect your income without seasonal variance. You don’t have to worry about furnishing your rental or keeping it stocked with supplies. Because a long-term rental doesn’t require the constant advertising a short-term rental needs to find occupants, you’ll save money on that too. And since you won’t be dealing with day-by-day turnover, you don’t have to worry about frequently paying a cleaner to visit your rental–or worse, picking up a sponge yourself.

Cons of a Long-Term Rental

One drawback of a long-term rental is the risk of damage. When you have a person living on your property for a year or more, the damage is undoubtedly going to add up. Of course, it’s equally possible you could face damage from careless guests in a short-term rental. Either way, including a damage clause can help keep your property safe. Another potential issue with a long-term rental is that if you end up with a bad tenant, the experience can be unpleasant. Good tenant screening is the best way to find someone who will follow the terms of their lease and get their rent in on time.

Running a long-term rental certainly has its challenges. Working with a property manager might be the answer for a property owner looking to cut down on as much inconvenience and stress as possible.

The Easiest Way To Turn Your Home Into A Rental

There’s no universal advice when it comes to deciding how to rent out your property. At the end of the day, the decision should stem from your rental’s individual factors, not to mention your personal goals as the owner. If you’re interested in turning your home into a long-term rental, a property management company like Rent Portland Homes by Darla Andrew can help you make that dream a reality. We screen tenants, handle maintenance, and collect rent. Working with us makes running a rental utterly painless. For more information, call or text us at (503) 515-3170 any time or drop us a line through the contact form on our website.