Why short term rental is becoming the preferred business model for property owners.

As a professional host of short term rentals, I have seen firsthand how this type of accommodation can provide an excellent alternative to traditional long-term rental properties. In this article, I will explain why short term rentals are a great choice for landlords and property owners and why they should consider renting their properties on a short term basis especially if the appoint a host to manage it in person.

One of the biggest advantages of short term rentals is the higher rental income that can be generated. While the occupancy rate may be lower compared to long term rentals, the nightly rate charged for short term rentals is often much higher. Over time, this can lead to a significant increase in rental income, especially when properties are in high demand such as Mosselbay or the greater garden route area.

Another benefit of short term rentals is the ability to adjust the rental rates according to the market demand. This means that during high season or peak travel times, the property owner can charge a premium for the rental, which can increase the income substantially. Additionally, by offering short term rentals, landlords can take advantage of the growing trend of remote work, digital nomads and flexible travel, which can lead to longer stays and a consistent income stream.

Short term rentals also offer an opportunity for better property maintenance. As the property is frequently occupied, landlords can ensure that the property is well-maintained and any necessary repairs can be addressed quickly. This can help to avoid long-term issues, which could be expensive to fix if left unattended. Something you only find out after the tenant has left.

Furthermore, short term rentals offer a more secure option for landlords. With short term rentals, property owners have more control over who stays in their property. They can screen potential guests more carefully and may require a security deposit to ensure the property is looked after. Additionally, as guests are only staying for a short period, there is less risk of damage or wear and tear on the property.

In terms of profitability, short term rentals can offer much higher returns compared to long term rentals. This is particularly true when you factor in the potential for seasonal or peak time rate increases, which can significantly boost rental income.

One spesific factor to consider is that even though occupancy and revenue may be lower during off peak seasons and rates and revenue may be lower, this is also true for maintenance. With short term rentals no-occupation-no-cost is to the benefit of the property owner. The goal in such a case is to get maximum occupation even if at lower rates. The goal is only a third of the rent of the long term tenant as it is compared to full occupation.

Let me explain.

During the peak season, occupation is much easier and therefore the rates can then be the focus and therefore maximising rates during peaks season should be the focus. During off peak season the model is slightly different.

To take an example:

If a property is rented for only R500 per day for ten days during off peak seasons the rent may be much lower than what could be earned in a long term agreement. Let us say 10 days (30% occupation). That is only R5000 for the month. However, this is compared to full occupation rates. If the property is rented for long term at R10 000 per month the revenue per day will be less than for short term tenants. If rented at R10 000 per month that effectively means 100% occupation and at R10 000 / 30 days is R330 per day. BUT, the associated costs are also higher and the flexibility is reduced and risk is vastly increased with a longer term tenant.

Think about this carefully as this is why the other benefits of short term rentals are now becoming even better.

Other associated risks with long term tenants.

In South Africa this is a major factor as problems like non paying tenants and evictions are always in the hands of the property owner. If such a risk were to appear the benefit of earning an income not only falls away but any other benefit of perhaps renting out during peak season is lost and may even cost the property owner in damages and cancelation fees if it was rented to guests over the peak season, not to mention the legal costs.

All of the above let the other benefits become more enticing to the property owner.

The offer of greater flexibility for owners who may want to use the property themselves or sell it in the future. By renting on a short term basis, the property owner has greater flexibility to use the property themselves or sell it on the market without worrying about tenants.

In conclusion, short term rentals provide landlords and property owners with a unique and more profitable way to rent their properties. With the added benefit of greater flexibility, increased rental income, better maintenance, and greater security, short term rentals are an increasingly popular choice for property owners. As a professional host of short term rentals, I encourage landlords to consider this type of rental for their properties and experience all the benefits it has to offer.

Author: Kobus

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