Short Term Rental Tips and Legal Forms

There may be a high demand for short term rental apartments or vacation accommodation, but what are the implications for the property owner?

Some landlords will prefer the security of a long term lease, knowing to what extent their mortgage payments will be covered for a specified or guaranteed period of time. This makes it a lot easier to do budget calculations.

However, catering for short term leases may be very lucrative or your could even cater to both short and long term tenancies, depending on where your property is situated.

For example: You could take advantage of holiday rentals during the high vacation season and once that demand lessens, you could make the property available for periods lasting a couple of months.

We'll take a good look at the Pros and Cons of short term rentals vs airbnb vs longer term leases further down on this page.

Please Note:
We have a variety of free Landlord forms to assist you with managing your tenants, such as:

• Rental or Lease Agreements
• Real Estate Power of Attorney
• Rental Application form
• Eviction forms,
  etc.

How Long is a Short Term Rental

This is typically seen as a period which is less then 30 days, but as is always the case, varies in different territories.

Rentals can be done one a weekly basis or even for a couple of days only.

There is a distinction in the name of the legal form too - Generally a short term tenancy will be called a rental agreement whereas a longer term tenancy (6 months and more) will be called a lease agreement.

Even a short term rental should be formalized with a written rental agreement, setting out the terms and conditions and obligations of both parties.

Short Term Rental Benefits

• The landlord may be able to charge a higher rent, which is acceptable practice for short term tenancies.
• Many international companies have a need for short term accommodation for their expatriate employees and are prepared to pay high rentals. If your property is well located, the corporate market can be very lucrative.
• You can raise the rent more frequently without having to wait for a long term lease to run its course. The landlord must give proper notice to a tenant of his intention to raise the rent.
• Landlords may be reluctant to enter into a long term lease because of concerns over eviction processes. With a short term rental it may be easier to get rid of a problem tenant, inasmuch that the landlord may exercise the option not to renew or extend a lease. In most cases a 30 day written notice from the landlord may be enough to terminate the tenancy.
• A month to month rental agreement may specify automatic renewal. The onus is then on the tenant to give written notice of his intention to vacate. Failure to give such notice may obligate the tenant to another month's rent.
• The landlord can change the terms of the rental agreement more frequently, with proper notice to the tenant of course.

Vacation Rental vs Short Term Rentals

If your investment property is in a vacation area, the landlord can also make use of the property as and when.

We actually enjoy having a holiday property (which we use often) without having to worry about linen to launder or cleaning up to do. And having a securely locked owner's cupboard means we don't have to pack a number of items, since we have it there waiting for us. And touch wood, we've never had any incident of our private property being invaded!

The highest rental yield is obviously during the popular holiday periods, but we (as owners) are very happy to make use of the property outside these periods when the place is not so crowded with tourists.

Incidentally, it is not only the rental yield that will determine how good a property investment turns out to be. We've had a number of properties where we had to subsidize the monthly running costs of the apartment, but the capital growth in these locations more than made up for the shortfall!

Airbnb vs Long Term Rental

To a large extent the location of the property will determine how successful a landlord will be in running it as an airbnb.

It is a labor-intensive exercise but can be rewarding both financially and socially. Having said that, it does have the advantage that it is very flexible and the landlord can schedule time-out periods when he/she needs a break.

Disadvantages of Short Term Rentals:

• A higher turnover of tenants may mean higher than normal wear and tear. Short term tenants may not be as caring about a property and the constant moving in and out of furniture can cause damage to walls, carpets etc.
• More vacancy periods. It is often practically impossible to avoid unoccupied periods to effect cleaning of the apartment and to co-ordinate moving out and moving in dates of subsequent tenants.
  Note: Although the higher rental may compensate for void periods, in some jurisdictions you may well be liable for tax on an unoccupied dwelling.
• Higher costs of advertising and administration such as tenant screening, background checks, accounting etc. Although some of these costs may be covered by the rental application fees, the landlord will be responsible for the rest.
• More time consuming: Meeting with tenants, showing the property, doing walk-through before and after the rental period.

This is another example where a combination of the two may suit both landlord and tenant.

They may enter into a weekly or month to month rental and if they find the arrangement agreeable, enter into a new long term lease.

However!

We've had requests for a short term let (a month or two) of a fully furnished apartment, and the prospective tenant expects to pay the advertised monthly rate which is meant for a one year lease.

This would be cheap at the price for the tenant but not a situation that we as landlords would want to entertain.

There is simply too much administration involved, not least of which is arranging access to the secure complex which may involve biometric scans etc.

Some apartment blocks also do not allow short term rentals for the above-mentioned security reasons and because short terms tenants do not care if they upset the neighbors.

Before you change your rental terms, you need to confirm with your insurance company that your policy will still cover you as originally specified. You may find that the premiums will be higher for holiday rentals.

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