It’s an age-old question. As a landlord, tenants are your source of income, so this is a business question to consider carefully. When you sign on a long-term tenant, you’re typically committing to at least a one-year lease as opposed to the nightly or weekly contract with short-term renters.
So it’s time to think about some of the pros and cons to signing on a long-term tenant over a short-term renter.
Pro: A Steady Source of Rent
A long-term tenant can be a fantastic financial decision. Throughout the lease period you will receive monthly rent, and generally they are responsible for taking care of utilities, internet, and certain upkeep expenses. This makes planning your budget for the year much easier and can provide you with peace of mind. You won’t have to worry about gaps in income because no one decided to rent out your property for a week or two.
Con: Less Flexibility
So market values are going up and you think it’s time to increase the rent. There’s a snag, however; your long-term lease states very clearly that you will only charge a certain amount every month. If you want your tenant to pay more, you’ll have to wait until it’s time to renew the lease.
You also won’t be able to sell, use, or move the property during the period of your tenant’s lease. So any major changes will have to be put off until the end of the lease.
Pro: Tenant Screening
With short-term tenants, you don’t really have time to screen every one. Interviews, credit checks, and references seem rather pointless for someone who won’t be staying more than a week or two. That means you’re basically rolling the dice when it comes to who you’re letting into your property.
With long-term tenants, you do have the luxury of choice, and it’s frankly essential to ensure you thoroughly screen potential renters to find quality tenants. After all, this is a commitment for both of you. You can meet them, check references, ask and answer questions, and decide if this is a person you feel comfortable entrusting with your space. But it means you have a much better chance at getting a renter that will properly maintain the property, pay on time, follow the rules, and communicate with you.
Con: Harder to Get in for Maintenance and Renovations
If you’ve decided you want to go with a long-term tenant, you unfortunately don’t have the luxury of just popping in unannounced to add a new coat of paint or spray for pests. It can be a logistical headache coordinating with the tenant a period of time for them to be out, moving furniture and belongings, and you might need to compensate them in some way for the inconvenience, especially if they have to stay elsewhere during the process. With short-term tenants you have far more flexibility scheduling maintenance and renovations, as you can simply get these things done in-between rentals.
In the end, it’s up to you whether a long-term or short-term tenant suits your needs. Both have their benefits and pitfalls, so think it over and determine what will be in your best interest.