An investment property in Lakewood is usually going to fall into one of two categories. Either it will be a long term rental, with a tenant signing a lease agreement of a year or more, or it will be short term rental, which is often the same as a vacation home. It might also be a property that’s listed on a site like Airbnb or VRBO.
Short term rentals have exploded in popularity. People who want to visit Lakewood, Colorado might choose a vacation rental instead of a hotel. If you’re a property owner, you may be wondering whether it’s better to rent out your home to long term tenants or short term, temporary tenants.
There are pros and cons to owning either type of rental property, and the ownership experience is different in each case.
Short term rentals are going to require you to move a bit faster. You’ll have a lot more turnover, and you’ll need to get your property ready between guests frequently. A long term rental is different. You have the same person in place for a long period of time.
When it comes to how you rent out a property, there are several differences to long term rentals and short term rentals, and we’re exploring those in this blog.
Let’s Look at Rental Income for Long and Short Term Rentals in Lakewood
When you’re thinking about what you’ll earn as a long term landlord versus a short term landlord, rental income is the first thing you’ll want to think about.
Short term, vacation rentals have a larger upside in this area because they earn more on a per-night basis. Sometimes, the income per night or per week is double what you’d earn on a long term lease. For example, on a long term lease, you might earn $2,000 a month in rent.
But, if you’re renting out that same property for only one month, you could charge between $3,500 and $5,000 for the month, depending on your amenities, location, and the season.
Of course, that’s a per-night rate, and you won’t have 100 percent occupancy with a short term rental.
Long term rental properties have a more consistent income stream. There isn’t a seasonality issue, and there’s a low risk of vacancy. In Lakewood, there’s a high demand for long term properties. Tenants are looking for an attractive, well-maintained home, and they’re willing to stay there. Turnover rates are lower and so are vacancy rates in long term residential leases.
What you’re able to earn on a vacation property will also depend on your home’s location and condition. We have seen homes of the same size just a few spots away from each other having different views and different parking set-ups. Those things lead to a large variance in what the owner earns.
Short term rentals will have you always hustling to attract tenants. You’ll earn more on average per night with that short term property, but when it’s low season and you don’t have as much interest from tourists and travelers, you might find you’re not earning any income at all.
What about Lakewood Rental Property Maintenance on Short Term and Long Term Homes?
Short term rentals are going to have a higher standard for maintenance and repairs. Your guests will expect hotel-level comfort. You’ll need to maintain your home and provide high quality linens as well as comfortable, durable furniture. Guests will expect to have full use of your kitchen, which means you’ll need to outfit it with a coffee maker, microwave, toaster, plates, pots and pans, and all the utensils and kitchen fixtures that guests need.
You’ll have more cleaning to do between guests as well. Laundry will need to be done, and the entire home will have to be deep cleaned.
Long term rental properties have lower maintenance needs overall and probably less risk and expense. There’s one tenant in place, and they’re helping you to take care of the property by changing air filters, making timely maintenance requests, and keeping the place clean and free of dirt, deterioration, and pests.
There will be maintenance issues no matter what type of property you’re renting out. In a long term rental, however, you are dealing with the needs of one tenant in your property and not a revolving door of guests who will require different things.
Lakewood Property Management Fees and Expenses
Your short term rental properties are going to come with higher management fees because there’s more work involved. You can expect to pay a bit more for short term management because of the ongoing marketing and advertising that’s needed, the precision in keeping up with bookings, the collection of deposits and payments, and the constant communication with current and incoming guests.
There are higher expenses as well. Short term property owners need to cover the gas and electric bills as well as the water bills, cable, and Wi-Fi. With a long term property, these expenses shift to the tenant. You can even include landscaping and snow removal bills by rolling those service costs into your rent every month.
Will You Want to Use the Home?
As you’re deciding whether to turn your property into a long term rental home or a short term rental home, it’s not always simply about the money and the work that’s involved. There’s also the question of whether you’ll want to use this home yourself. If you’re moving out of state, maybe you’ll want to use this as a vacation home for yourself once in a while. In that case, a short term rental will work better for you. If you don’t anticipate ever staying in the property, however, maybe a long term lease is your better option.
At Assured Management, we’re set up to help you with either long term rental properties or short term vacation homes. If you have any questions about your own rental property and what would be best for you, contact us at Assured Management, Lakewood property management experts serving residential landlords in West Denver and the surrounding areas, including Littleton, Golden, Wheat Ridge, Arvada, and more.