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Short-Term vs Long-Term Rental: The Pros and Cons

April 7, 2020
Tara Toman

Homeowners and property investors will be familiar with this conundrum. Traditionally, having a rental property would imply a long-term residential, contractual agreement, but more and more investors are turning to short-term rentals to increase their income potential. In this blog post we weigh up the pros and cons of both options for your holiday home.

The popularity of short-term holiday rentals has increased exponentially in recent years. Consumers want that homely feel even when they are on holiday, and the travel industry answered by giving us platforms such as Airbnb, Bookabach, and of course Bachcare!

Renting out your bach to someone else is nothing new for New Zealand, but what is new is the growing number of property investors choosing a short-term rental model instead of long-term tenancy.

Short-Term Holiday Rentals

The main challenges of short-term rentals that people cite are things that a company like Bachcare can help with! Check-ins, check-outs, support for guests - it’s a lot to manage alone!

Our dedicated team of Holiday Managers oversee the meet & greet as well as the cleaning, and guest support is literally just a phone call away. We also take care of marketing and revenue optimisation.

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Main benefits of short-term rentals:

Greater earning potential

Not only are higher rates widely accepted due to the nature of the stay, you also have the ability to manage nightly rates based on the time of year, events, and increased demand. Find out what other properties are earning in your area.

More flexibility

Home and Income is a goal for many New Zealand investors. With Bachcare you’ll be able to use the property for a family holiday when it suits you? No problem - with short-term rentals you dictate when you’re open for bookings, and when you want to block your calendar.

Less wear and tear

The length of bookings vary but generally they are short stays. Receiving guests in short bursts like this as opposed to long-term tenancy means wear and tear is minimal. If you use a property management company, it also means your property will be cleaned all year round - something which cannot always be guaranteed with traditional rentals.

Demand is growing

The demand for holiday rental properties is growing in New Zealand. There is plenty of opportunity to maximise your property’s exposure and occupancy rate with Bachcare - particularly because we can promote your holiday home on other top listing sites: Airbnb, and Bookabach.

Long-Term Rentals

The main disadvantage of long-term rentals is lack of flexibility and control. For some, the commitment to one tenant for an extended period of time is a benefit. However for those that want to keep their home away from home as a holiday getaway, it’s very inconvenient - no spontaneous trips to the bach!

Homeowners can also run into problems finding the “right” tenants. This process can often be lengthy and if not done correctly, can lead to headaches further into the rental agreement.

Main benefits of long-term rentals:

Steady income

While it’s likely to be lower than short-term rental income, due to the nature of tenancy agreements it will be more consistent throughout the year. It is not guaranteed as such but is a very appealing option to property investors particularly when the home is not used as a holiday destination for their own family.

Less maintenance cost

In long-term rental agreements, tenants are contracted to take care of the bills and general maintenance costs. For most, this also means you will not have to furnish the home.

Less renter turnover

Once you’ve found the right tenants, you can expect them to be there for the duration of the contract!

While some may prefer the consistency of traditional rentals, there is no arguing the fact that there is far greater earning potential with the short-term model. The key takeaway here is the disparity in earning power, and having the flexibility to use the property when you want to is an added bonus!

Don’t just take our word for it - find out how the Shah family made the switch from long to short-term rentals by using Bachcare. Decided that short-term rentals are right for you? Speak to one of our New Owner Advisors today!

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