Today, long term rentals are popular. They’re used by everyone from solo vacationers and traveling workers to families who want a change of scenery.
If you’re thinking of investing in a property, a long term rental is an efficient way to produce consistent, positive cash flow. It comes with a range of benefits and once you know how to begin, it can offer a more reliable stream of income than its short term rental counterpart.
But exactly what is a long term rental, what are the benefits?
What is a Long Term Rental?
A long term rental property is often rented out to a long term tenant for a long period of time. This can range from 30 days to 6 months (or more) depending on the landlord or the property management company.
A long term rental may come with or without furniture and may be used for vacation, work relocation, or for people who are in-between homes.
Compared to a long term rental can provide an immediate sense of relief for its tenants. It can give a “home-away-from-home” feeling and fill in the gaps when something unexpected comes up.
Generally, long term rentals mean less turnover, more consistency, and hopefully, less of a headache.
Benefits of a Long Term Rental
Whether you’re looking to start you’re going with a property management company like Best Property, there are plenty of benefits of a long term rental.
In real estate, a vacation rental is seen as a lucrative rental strategy. There are various types of long term rentals, from those that are turn-key and fully furnished to those that require a bit more effort.
Key takeaways
- Long term rental property is normally occupied by a tenant with a 12-month lease.
- Advantages of a long term rental include more predictable rental income, lower tenant turnover, and ease of financing.
Long-term rentals
There are several distinct advantages to having a long term rental, along with some disadvantages to consider as well:
Pros of long-term rental property
More predictable income: Rental income is consistent throughout the entire year when a tenant is on a 12-month lease and pays the rent timely. Knowing how much cash is coming in each month makes it easier to budget for maintenance and repairs, and to more accurately forecast the potential return on investment.
Easier to finance
Rental property occupied by a tenant on a long term lease may also be easier and more affordable to finance when an investor knows what the cash flow stream is. Real estate investors may receive more attractive interest rates and financing terms when a lender views a long term rental as having less potential risk due to vacancy and higher repairs.
Lower operating expenses: Renters on a long term lease generally take care of basic items such as cleaning the home, doing yard work, and paying for their own utilities. Long term rentals also generally have less wear and tear, because tenants tend to take better care of a property that they think of as their home instead of a hotel room.
Less tenant turnover: Administrative tasks such as marketing a property for rent, negotiating and signing a new lease, and making the property ready for a net tenant are much lower with a long term rental. In fact, some single-family rental owners may find a good tenant that renews the lease year after year.
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