If your second home is currently sitting empty and not generating income, you’ll soon come to a crossroads. Should you rent it out to tenants as a long-term rental? Or to travelers as a short-term rental? Both can seem appealing at first glance—one is more lucrative, the other generally provides more constant income.
Determining which type of rental is the best fit for your financial and lifestyle goals takes further review. Don’t worry, we’re here to help. We’ve examined the perks and drawbacks of both rental strategies for you.
Short-term rentals, often referred to as vacation rentals, are furnished residences generally rented out to travelers looking to stay anywhere from one night to one month (depending on your market). Guests typically book these rentals for a few days. People are drawn to vacation rentals as an alternative to hotels primarily for the increased space and for the residential conveniences, like a kitchen and a washer/dryer.
Vacation rentals can be lucrative. Especially if you charge the right rates at the right time. This is one of the biggest benefits of short-term rentals—the flexibility to align your nightly rates with demand. For example, special events, high season, and weather can all be reasons to charge higher rates. At Vacasa, our revenue analysts update our homes’ rates daily to match future demand, so you can effortlessly capitalize on those peak periods. Long-term rental leases, on the other hand, usually cap your earnings and lock you into a set rent amount month after month.
Since guests only stay for short bursts of time, you’ll have more flexibility to book your own personal vacations at your property or have an impromptu getaway when there’s a gap in reservations.
You can block off periods on your calendar as much or as little as you like with Vacasa. In other words—stay when you want, rent when you don’t. In comparison, your long-term rental is off-limits for personal use. Once your renter has moved in, it’s their home for the entire lease term.
A great upside to using your home as a vacation rental is that guests don’t occupy your home on a daily basis. So, it can take much longer to build up any noticeable wear and tear in your home. Long-term renters live in your property day in and day out, usually leaving your home in need of more maintenance and repairs from overuse.
It’s easier now more than ever to own a vacation rental and successfully rent it out without lifting a finger. You can use smart locks in lieu of handing off keys, and smart thermostats to set temperature and save energy.
For a truly hands-off experience, work with a full-service vacation rental management company like Vacasa that will handle it all for you—cleaning, marketing, setting rates, 24/7 guest service, and more.
Today’s travelers are vocal. They won’t hesitate to post reviews complaining about dirty floors, broken air conditioners, or threadbare towels. So regular upkeep and cleaning between stays is vital to your review scores and future success.
At Vacasa, we provide professional housekeeping at no extra cost. If homeowners opt in to our Linen Program, we’ll also stock their home with hotel-quality towels and sheets, and replace them when needed. Plus, our local teams will coordinate maintenance and repairs on your behalf.
Your vacation rental bookings will depend on the on and off seasons of your destination. While you can adjust rates to compensate for a slow season, rental income isn’t guaranteed.
However, there are ways to help increase your off-season bookings, like installing a hot tub.(Winter temperatures and outdoor hot tubs are a perfect match for guests—plus you can earn 15–20% more in rental income.) If you market your vacation home yourself, you can also try sending promotions to your email list ahead of time, and actively posting content on your blog and social media channels to stay top-of-mind all year round.
Owning and managing a vacation home can require a lot of work. Marketing, cleaning, responding to guests, keeping up with all your listings online, constantly setting rates to match rental market demand, conducting repairs—it can quickly become overwhelming.
That’s why savvy homeowners choose companies like Vacasa to take care of everything. With Vacasa, your vacation home can potentially become a hands-free investment, as you’ll now have a team of vacation rental pros working on your behalf.
Before using your second home as a short-term rental, check if they’re allowed in your local jurisdiction to begin with. Some municipalities frown on them and impose various restrictions, such as capping how many total days you can rent out your home. Certain locations ban short-term rentals completely, while others are more flexible.
What we’ve found in our years of working in the vacation rental industry is that every area is different. And short-term rental laws and restrictions continue to change. We help our vacation home owners navigate any regulations and necessary permits. If you’re in the market for a short-term rental, we publish an annual list of top destinations to buy a vacation home (where vacation rentals aren’t just legal—they’re flourishing).
The definition of a long-term rental varies significantly from state to state. In some locations it can mean a lease term of at least 30 days, while in others it refers to stays of 180 days or longer. One-year lease terms are most common for long-term rentals. Let’s take a look at both the upsides and downsides to investing in long-term rental properties.
Slow and steady—that’s how you’ll earn income with long-term rental properties. Usually, you’ll collect monthly rent with little effort, no matter the season. Consistent income is the biggest benefit to renting your second home to long-term tenants. Plus, residents usually pay for their own utilities, such as water, gas, electric, and WiFi.
Once you find a tenant for your long-term property, there is little left to handle. You no longer have to market the property, clean it regularly, or prepare it to be rented. For the most part, long-term tenants take care of their own bills, plus some of the upkeep of the property. Generally, you’ll only have to step in to address repairs and home maintenance projects.
Long-term residents generally expect to bring in their own furniture and make the space their own. This counts as a big cost savings, since you don’t have to invest in furnishing your entire home.
It’s common for long-term rental landlords to require a security deposit before tenants move in. This can ease any worries you have about damage to the property. Tenants can generally get their full security deposit back once you’re sure no damage was left behind and the property is in the same condition as when they moved in.
Long-term tenants typically secure a year-long lease. This means you don’t have to worry about finding new tenants, doing security checks, or handing over keys until that rental agreement expires.
The biggest disadvantage to long-term rentals comes down to this—weaker earning power. With long-term properties, you can’t adjust rates throughout the year to match demand or peak season. In short, you set rates, then forget them.
Plus, long-term residents expect to pay much less than a traveler would on their vacation. A one-bedroom property that’s currently renting for $1,000 a month could potentially garner hundreds of dollars a night as a vacation rental (depending on location, amenities, and demand).
With long-term rentals, you sacrifice using your property as your personal vacation spot. Goodbye, birthday celebrations at your beachfront condo. Farewell, impromptu getaways to your mountain cabin. Once you take on a new tenant, that property is off-limits to you, except to conduct repairs or maintenance.
Renting long term means trusting one tenant for the long haul. And you’re no longer calling the shots. Want to check for any messes or property damage after neighbors complain of a rowdy party? You generally have to give your renters notice before showing up. Need to kick out a difficult tenant? Evictions (and possible arbitration) could possibly take longer and cost more in legal fees and lost rent than you anticipate.
In comparison, renting in short bursts to vacation rental guests means you don’t make any long-term commitments—and you can use the pauses between guests to inspect, clean, and account for everything.
Posting Craigslist ads, background checks, and endless back-and-forth communication... That’s just a fraction of what it takes to secure a long-term tenant. Even after they’ve signed a lease, there’s still the possibility you’ll feel locked into the contract when things aren’t ideal. If you rent your vacation home with Vacasa, our team will vet your guests quickly behind the scenes.
Long-term renters generally live on your property full-time and could cause more damage and wear and tear over time than guests only staying for a few days. Since you can’t access your long-term rental as easily, blinds could be broken or rugs stained for months before you ever find out.
At Vacasa, we have housekeepers and local property managers who inspect and survey your vacation home after every stay, taking stock that everything is still in great condition and in place.
In many areas, a mid-term rental is longer than a short-term rental, but not quite a long-term rental.
Mid-term renting could be the right fit if you’re looking to rent your vacation home for a season or two, but want to keep it open for yourself the rest of the year. Your options could include finding a tenant to rent your snowbird property on the Gulf Coast for the whole summer, or renting out your mountain cabin for the winter season.
Many of the benefits and drawbacks of mid-term renting overlap with either short-term or long-term renting. For instance, you’ll most likely still need to furnish the home, but the rental income is more consistent during the fixed lease period.
In most cases, short-term vacation rentals are rented out for between one night and one month—but these rental periods can differ market to market. They tend to be especially busy (and earn the most income) during weekends and high tourist seasons. Hosting vacation rental guests in short bursts also allows homeowners to allocate time for their own personal visits in between.
While it depends on the area, mid-term rentals are generally longer than a short-term rental, but not quite a long-term rental.
While short-term rentals are usually occupied by vacationers, mid-term rentals are used by people looking for a place to live for a shorter period than a normal annual lease (think snowbirds, business travelers needing corporate housing, people new to a city, or students).
Yes, Vrbo allows guests to rent homes for a month—as do Vacasa.com and Airbnb. When you allow month-long reservations at your vacation home, you increase your chances of earning a large chunk of vacation rental income from a single booking. Plus, a longer booking means no guest turnover and less cleaning required during that time.
Vacasa.com helps you encourage longer stays by automatically offering guests discounted rent for month-long bookings, where offered. Airbnb and Vrbo also let individual owners choose a custom discount for weekly and/or monthly stays.
Traditionally, a vacation rental is a home that a traveler can rent short-term, such as a beach condo or a mountain cabin. Now, with a booming interest in unconventional experiences on sites like Airbnb, even tree houses, boats, or yurts could be considered vacation rentals.
The one thing all these rentals have in common is that they offer fully furnished accommodations and residential comforts, such as a kitchen, a washer/dryer, and sometimes access to shared amenities like pools, hot tubs, and gyms. At Vacasa, our vacation rentals represent a wide array of homes from coast to coast—mountain estates in Breckenridge, cabins on Lake Michigan, condos on the shores of Kauai, and much more.
Yes, investing in a short-term rental property can reap ample financial gains (plus some personal ones, too). An investment property, like a beach house or a mountain cabin, can be a fantastic earner. Generally, tourists tend to indulge in accommodations while on vacation. Even better, they’re usually willing to pay a premium to stay in popular destinations. Besides delivering a high profit potential, a vacation rental can also serve as your own private getaway to escape to (when you rent with us, you can stay whenever you’d like) or as a retirement home down the road.
Call 866-256-1928 to speak with a Homeowner Consultant, who can answer preliminary questions and see if we’d be a good fit for you.
If you'd like to move forward, we’ll put you in touch with our market expert in your neighborhood to explore the financial potential of your home, outline our management fee, and introduce your local team.
Vacasa offers property management and other real estate services directly through Vacasa LLC and through Vacasa LLC's licensed subsidiaries. Click here for more information about Vacasa's licensed real estate brokerage/property manager in your state. Vacasa’s licensed real estate brokerages/property managers include: Vacasa Alabama LLC; Vacasa Arizona LLC; Vacasa Delaware LLC, 302-541-8999; Vacasa Florida LLC; Vacasa Louisiana LLC, Dana MacCord, Principal Broker, ph 504.252.0155 (Licensed in LA); Vacasa Michigan LLC, 947-800-5979; Vacasa Missouri LLC, Susan Scanlon, Designated Broker; Vacasa Nevada LLC; Vacasa New Hampshire LLC, P.O. Box 283, Conway NH 03818, Dave Grant, Broker of Record; Vacasa New Mexico LLC, 503-345-9399; Vacasa New York LLC, 888-433-0068, Susan E. Scanlon, Real Estate Broker; Vacasa North Carolina LLC; Vacasa Pennsylvania LLC; Vacasa Real Estate Corporation, California DRE #02105811, Joseph Czapkowicz, California DRE #01380722; Vacation Palm Springs Real Estate, Inc., California DRE #01523013, Joseph Czapkowicz, California DRE #01380722; Vacasa Real Estate LLC (licensed in Colorado, Daned Kirkham); Vacasa Real Estate LLC (licensed in Idaho, Oregon, and Utah); Vacasa Real Estate LLC (licensed in Tennessee, 615-671-9916); Vacasa Real Estate LLC (licensed in Texas, Debra Brock, Designated Broker); Vacasa Real Estate LLC (licensed in Washington, Robert Brush, Designated Broker); Vacasa Seasonals Inc., California DRE #02160171, Daned Kirkham, California DRE #01424621; Vacasa South Carolina LLC; Vacasa Tennessee LLC; Vacasa Vacation Rentals of Hawaii LLC, 3350 Lower Honoapiilani Road, Suite 600, Lahaina, HI 96761; Vacasa Vacation Rentals of Montana LLC, Patrice Tompkins, Licensed Property Manager; Vacasa Virginia LLC; Vacasa Wisconsin LLC; Vacasa Wyoming LLC. In Canada, this advertisement is provided by Vacasa Canada ULC, CPBC lic. number 75826, 172 Asher Rd. V1X 3H6 Kelowna, BC.