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Long-Term Tenant or Vacation Rental Property: Which Is Best?

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Before buying an investment property, you need to know the type of rental you’ll turn it into. While both types have their pros and cons, vacation rentals and long-term tenant rentals are drastically different.

Even if you think you have your mind made up, some further review and reflection won’t hurt. Take a look at the benefits and drawbacks of buying a vacation rental property or a long-term rental.

Long-Term Tenant RentalVacation Rental
PROS
– More consistent income
– Won’t have to worry about constantly finding renters
– Only have to pay for cleaning in between renters (about once a year)		PROS
– “Bad” renters only stay for a few days
– Not allowing pets won’t hurt your potential for renters
– Can have some downtime if there’s an off-season
CONS
– Could be a smaller profit margin
– Some cities require rent control
– Defects/issues may take longer to find out about (since you’re not in the property as often)		CONS
– Not allowed in all areas
– Downtime/off-season means no profit
– Will pay more for maintenance and cleaning
– Have to furnish

Long-Term Tenant Rentals

A long-term tenant rental is a property you lease out for a person or people to live in. Your property becomes their primary residence and they pay you to rent.

Pros

Consistent income: When successful, you’ll have very little downtime (unlike a vacation rental property that might have an off season). It’s nice knowing you can count on the same amount of rent each month.

Less turnover: Once you have tenants with a lease, you won’t have to worry about finding a new renter for months (if not a year or longer). Having to constantly find or market for renters is stressful — the less you have to deal with this, the better.

Spend less on cleaning: You really only have to hire professional cleaners between renters, or maybe annually if your renters are staying longer than a year. The renters are primarily responsible for keeping your place clean, which is not the case in a vacation rental.

Cons

(Potentially) smaller profit margin: Charging per month instead of per day significantly lowers how much you’re making each day with a long-term rental. For example, a vacation rental might cost $150 a night, but a long-term rental might be $900 a month — $30/day.

However, we say “potentially” because vacation rentals often won’t have visitors for months when there’s an off season. Depending on your circumstances, a long-term rental could still net an equal (or even greater) profit.

Dealing with rent control: Some cities put a cap on the amount you can charge for rent (New York is famous for this). If that’s the case, you can’t raise your rates, even if they keep up with the rising cost of living.

Issues take longer to find out about: Vacation rentals require more frequent attention. Things like a leaky faucet or a broken tile become apparent much faster when you’re around the property more often (which means they can be fixed much faster, too).

Vacation Rentals

A vacation rental property is an investment property that you use solely for (you guessed it) vacationing guests — picture Airbnb and VRBO rentals. While some rentals are available all year round, many vacation properties have an “on” season and an off season — they’re often only rented out for part of the year.

Pros

Bad renters are temporary: Problematic renters only stay in your property for a short amount of time, likely never to return. With a long-term rental, you run the risk of having awful tenants for an entire lease. Even if you get bad renters, most companies offer coverage that protects you, the property owner.

Downtime: Some people enjoy having several months off the clock. This, however, is also a drawback, as your property won’t make money in the off season.

Don’t have to worry about pets: Not allowing pets can hurt property owners with long-term rentals by limiting the tenant pool. As most people don’t bring pets on vacation, you won’t have to worry about this.

Cons

Not allowed in all areas: Some condos and cities prohibit turning your property into a vacation rental or have strict restrictions on how you can rent it out.

Higher maintenance cost: Much of your profit will turn over to cleaning and maintenance companies.

Furnish: Expect to pay thousands more for setting up and designing your vacation rental property than a long-term rental. Furniture, appliances, and decor are all expected upon guest’s arrival.

Between a long-term and vacation rental property, which is the better investment? That’s up to you to decide. But the great news is that no matter what type of investment property you’re looking for, you can find it on RealtyHive! Search through our listings and begin growing your investment real estate portfolio today.

International Vacation Homeownership Options

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Want to own an international vacation property? Better question: who doesn’t?! The great thing about vacation properties is that they not only provide you a home base for traveling but that you can even rent them out and make money. See the options for owning a beautiful bungalow in Belize or a quaint cottage in Canada—and benefit in the process.

RealQuick: Types of Vacation Homes

“Timeshare” is usually the word that pops into people’s heads when thinking about vacation homes, but there are plenty of other options. 

Cabins, beach houses, apartments, condos, and even hotel suites at resorts all are vacation homes. Virtually any type of property can be turned into a vacation home! And what’s more, these vacation home options are different than timeshares because you get to make the rules.

What to Do With Your Vacation Home

You can use your vacation home in three main ways: keep it just for yourself, rent it out yourself (such as through Airbnb or VRBO), or hire a third party to manage and rent it.

Keep It for Yourself

A lot of people get a vacation home (such as a cabin or lake house) and keep it as a standalone. They only use the property for their vacation purposes or perhaps allow family and friends to use it.

The Benefits:

  • Have a place to escape to.
  • Avoid paying for or finding accommodations while traveling.
  • It’s a financial asset.
  • The memories of spending repeated time in a vacation spot are priceless!

The Drawbacks:

By keeping it for yourself, the vacation property is only being used when you’re there. As is true with any property, it’s a significant investment. Some people also feel like they can’t travel elsewhere—they feel like they have to get their money’s worth. Not to mention, if you think owning one home is a lot of work, imagine owning two.

Rent It Out Yourself

Turning your vacation home into a vacation rental undoubtedly opens the door for additional revenue. With renting it out yourself, you are responsible for finding renters and managing the property.

The Benefits:

  • All the benefits of owning a vacation home, plus… 
  • Generates income off of a rental property.
  • Pays off the purchase over time.

The Drawbacks:

It’s a lot of work to rent out your place by yourself—many consider it a full-time job. It’s more convenient if you live near your vacation rental property, but nearly impossible if you don’t. You’ll have to do a solid job marketing it to ensure you’re getting your money’s worth. 

It should be added that if you don’t feel comfortable with others staying in your vacation home, this is not the option for you and that’s OK. Adding tons of stress for money won’t be worth it.

Rent It Through a Management Company

beautiful patio

Hiring a third party to manage and rent out your vacation rental eliminates a lot of hassle. With this option, a property management company takes over renting processes and also provides cleaning.

The Benefits:

  • All the benefits of owning and renting out a vacation home, plus…
  • Saves tons of time on cleaning and renting it out.
  • Makes it possible to own an investment property without having to live nearby.

The Drawbacks:

You’ll pay a fee for these services—it depends on location but some averages estimate 8-12% of the monthly value. Many who use management companies find it harder to use their vacation home themselves—at that point, they’re paying a fee and want the difference to be covered with extra renters.

Everyone has an option that works for them when it comes to owning a vacation property. But before you plan on laying poolside or start dreaming about what that added income will do for your finances, you need a vacation home! Look through RealtyHive to find your perfect property abroad.

plan, vacation, map, wanderlust,trip,planning,travel

Central American & Caribbean Vacation Spots

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While all-inclusive mega resorts have their time and place, sometimes you want your trips to be a little farther off the tourist path. Whether you’re looking for a less-than-conventional vacation spot, a location for a vacation or retirement home, or are considering an expatriate lifestyle these are some of the best places to check out in 2018.

Belize

While the beachy Ambergris Caye gets all the attention — and a lot of tourism — the Cayo District, home to the capital city of Belmopan, is where an adventure vacation awaits you. This jungle-covered landscape is home to many eco-activities and adventures and is dotted with Mayan ruins. San Ignacio, a town with a population of nearly 18,000 serves as the perfect point to launch your trip as all roads and activities branch out from this hub. Here you can find waterfalls, cave exploring expeditions, Mayan ruins and so much more!
Must Try Activity: Explore the hidden depths and crystal clear waters at Actun Tunichil Muknal, a natural wonder featured in National Geographic. From here you can swim into a mysterious cave known as Xibalba, which the ancient Mayans considered to be a portal to the underworld. You’ll have to hike, climb, and possibly even swim, but the history and beauty can’t be beaten.

Costa Rica

If your ideal vacation involves fewer beaches and more jungles, you must check out El Castillo in the Alajuela province. Getting there can be quite the trip as it’s about a 2.5 hour trek by car or bus through Costa Rican jungle roads, but once you make it, you’ll know the trip was worth it.
Must Try Activity: There are a ton of great things to do using El Castillo as a jumping off point, but visiting the hot springs of the Arenal Volcano tops the list. While there are numerous hot springs in the area, those looking for a more intimate and natural experience will enjoy Eco Termales Fortuna, where the number guests is limited per day.
Coming in close behind are the Mistico Arenal Hanging Bridges Park and the Sky Adventures Arenal Park (both offer a great view, neither are for those who are afraid of heights!) and the Arenal Ecozoo.

Tobago, Trinidad & Tobago

Scarborough, the capital of the island of Tobago lays outside the hurricane belt in the Caribbean. The population of around 17,000 gives off the smalltown vibes while having a deep-sea port allows for an influx of cruise tourists and a nearby rainforest preserve will make you believe you are in a much more remote locale. English is the official language of the island which makes it easy for Americans to travel around, although tourists should be aware that prices can be quoted in either USD or Trinidad & Tobago (TT) dollars, so make sure to ask which one your purchase is in!
Must Try Activity: Take a glass bottom boat out to Nylon Pool. It’s a shallow area in the ocean that you can bathe in! The “sand” is pulverized coral (so exfoliating!) and people who bathe here are said to return looking 10 years younger! Along the way there are beautiful, tropical fish to see and is very inexpensive with many tours under USD 10. Other notable attractions include Argyle Falls, a three-tiered waterfall with natural rock tubs (great for relaxing!) and swimmable areas and Fort King George, a military outpost from the 1700s with gorgeous sunset views.

Trinidad, Trinidad & Tobago

Gasparillo, a small town near Upper Santa Cruz in the San Juan/Laventille region (not to be confused with the town of about 16,000 on the southeastern side of Trinidad), located 5 miles (8 km) from the capital city of Port of Spain.
Must Try Activity: Spend your day lounging on the nearby Maracas Beach, the best place for sun, sand, and surf on the island of Trinidad. When you get hungry, head over to Richard’s Shark and Bake where they sell deep fried shark sandwiches with all the fixings. There are other shark and bake shops, but this is the local favorite!

Jamaica

Jamaica is known for beautiful, turquoise beaches, but almost as well known as the beauty are the hustlers and vendors that crowd the tourist areas trying to vend their goods. Looking for a more unadulterated paradise experience? Set up camp in the town of Green Island, located in the Hanover Parish on the northwestern side of the island.
Must Try Activity: Half Moon Beach is a private beach with a small entrance fee and provides the peace and serenity vacationers are looking for while having an onsite bar and restaurant for those whose version of paradise still includes a well-cooked meal. The beach also offers a nearby healthy reef for snorkeling and a bamboo rafting tour–the only of its kind on the open sea! Other fun vacation activities nearby include the Crocodile Reserve and Bird Sanctuary as well as the Kool Runnings Adventure Park, a theme park based off the 1993 movie Cool Runnings.