From time to time, we get calls from property owners who are trying to decide if they should rent their properties on a long term lease or as a short term vacation rental. The answer to this question varies depending on the owner and what they are looking for from their rental. Let’s discuss some pros and cons of short term and long term rentals and you can decide what’s right for you.

As you probably already know, the Coachella Valley is a popular vacation destination and because of this, there are many rental agencies that focus on short-term/seasonal/vacation rentals. This could be a great option for you as long as you know what’s involved.

Let’s start with the PRO’s of vacation rentals:

• Short term lease rental rates are often much higher (sometimes double or triple!) than those of long term rental rates for similar properties so your income is greater during the lease term.
• Since each lease renewal will often be accompanied by an increase in rent, any extension of the lease by the tenant would most likely be to your monetary advantage.
• When a new lease is signed, depending on the market conditions, you could expect a significantly higher rent than with the previous lease.
• With a long term lease you, as the landlord, are locked into a set of lease terms and conditions for an extended period of time. With short term leases, you can change the terms to suit your
changing needs with each new lease. Let me give you an example, I have a friend who owns a beautiful home here in the valley. He lives in the home and works in the valley during the week,
but spends most weekends in San Diego. He rents his home on the weekends for a premium daily rate when he is normally not there anyway. He can prepare the home for the next tenant during
the week and make excellent extra income on the weekends. If his schedule changes and he needs the home for the weekend, he can choose not to rent it for that weekend. This flexible
arrangement is the perfect solution for him.

Then there are also some CON’s:

• Is the short term tenant unwilling to commit to a long term lease because of job insecurity or other financial issues that could make default on his part more likely?
• Are you certain that you will be able to find another tenant when the current one leaves in a few weeks or months? You have to keep in mind the changing real estate market. A shortage of rental
availability today is to your advantage but could turn into a surplus at any time, and the next tenant could pay you less than the current one.
• In the Palm Desert and Coachella Valley area, the summertime (off-season) can be particularly difficult to find tenants and you could face months of vacancy that will cost you money
• If you experience extended vacancy, you are much more likely to experience break-ins and general deterioration of the property that would not happen in a long term lease contract
• Costs that normally would be a tenant’s responsibility in a long term lease are yours in a short term lease such as: maintenance – gardening , pool maintenance, pest control, HVAC maintenance,
utilities – cable, electricity, internet, telephone, etc., upkeep – housecleaning, toiletries, replacing furniture and appliances, and regular carpet cleaning. Some short term leases even include a
stocked refrigerator. Depending upon the location of the property, there are also annual fees, insurance, license fees, and transient occupancy taxes
• High advertising costs to fill vacancies repeatedly. Some sources state that advertising fees for a short term rental can be over $1000 per year!
• It can be very time consuming preparing the unit between tenants especially if “vacationers” rent the home for “party time” and do damage. This is less likely to happen with long term renters.
• There is a lot of competition in the Coachella Valley for vacation rentals which may mean that you have to offer a lot of amenities in order to stay competitive.
• There are also community risks such as short-term rentals often receive negative media attention due to ransacking by short term tenants. Traffic, parking and noise are other problems that
have many neighborhoods concerned about short-term rentals.

Do you have the energy and time to repeat this process every few weeks or months? It is time-consuming and vacancies cost you money, period.

At All County Desert Property Management, our long term lease contracts run 12 months. That means less time worrying about vacant units. Long term leases are generally less time-consuming in terms of marketing the property and dealing with issues that arise. Short term rentals are more like “hotel rooms” and generally require more frequent attention. You have greater ability to generate stable monthly income with a long term rental, assuming you have good, honest, bill-paying tenants. Ideally, your tenants will be paying your mortgage, while you get to relax and watch your investment equity rise.

Making a decision about whether to agree to a short term or long term lease will depend on the individual circumstances of different property owners. But by and large, a long term lease will provide for greater security of income, less hassle in terms of finding new tenants frequently and getting the property prepared between tenants. And, in general, a long term tenant is one who will care for the property more as he will be staying there for an extended period of time. These are big positives for any Palm Desert and Coachella Valley property owner.

The choice is yours and All-County Desert Property Management is here to help you!!