With over 15 years in the short term and long term accommodation industry and as part of our approach to owners, we explain the difference between both options. This sometimes leads to confusion when they start to consider the best option for the property and their circumstances.
Let me explain the difference between the two options. The following definitions are related to fully-furnished and self-contained properties – an area where Australian Luxury Stays specialises.
A SHORT TERM RENTAL (often referred to as a holiday rental) is renting out a furnished property on a short term basis, considered for a period of less than 3 months. We refer to the occupiers of short term rentals as ‘guests’. These properties are rented by the night or by the week, however this depends on the owners’ circumstances at the time and the property location.
Owners may offer their property for short term rentals for the whole year if it is purely an investment, or for the majority of the year when they are not using it themselves.
Short term rentals have become a popular alternative to hotels particularly in recent years with the surge of the sharing economy websites such as Airbnb, Stayz and HomeAway. Guests like the privacy, a larger place to work and play, and the option to soak up the ambience of the locality.
A LONG TERM RENTAL, unlike short term rentals, typically refers to a lease for 6 – 12 months and the occupiers are referred to as a ‘tenant’. The tenants sign a Residential Tenancy Agreement, pay a bond and take responsibility for all utilities, such as electricity, gas and Wi-Fi if required. Rent is normally paid on a fortnightly basis and the owner is paid at the end of each month.
When owners decide to invest in a property for rental purposes, they need to understand their options in deciding what to do with their new property.
There are many options for owners and managers to consider when opting for short term or long term rentals. Often this decision can be made quite easily when the property itself is contemplated, including the location and the outcome the owner wishes to achieve.
However, there are a number of advantages and disadvantages to these two rental strategies. Hold tight for the next two posts while the pros and cons of both types of rental strategies are outlined in detail.
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