Another way to generate additional income.
There are many ways to earn additional income and one way is through property rentals. There are two main types of property rentals: namely short term and long-term rental. Short term as the name implies is for rental of a property for a short period ranging from one day to 30 days and possibly longer. Long term rental is normally for a period of one year or more.
There is a great demand for property rentals particularly here in the Turks and Caicos Islands. In fact, the demand is so high that there is a shortage of properties particularly for long term rentals. Of course, one of the reasons is that many long-term property rental owners have converted their property to short term rental.
If you can do so, I encourage you to explore either buying land or purchasing a rental property. The next question you may asked is should you do short term or long term rental. Honestly, there are pros and cons to both types of rentals and this article will attempt to address. Obviously, the choice is yours.
Pros and Cons of Short-term rental
One of the pros of short term rental is the opportunity to earn more money. You can probably get the same income in a week’s time from a short term rental that you would get from a long term renter for the month. A disadvantage of short term rental is that the demand may be seasonal and so some weeks or months, you may not earn any income. Therefore, it is important to estimate the pricing of your short-term rental properly so that you can cover the slow months.
Another pro of short term rental is that property management is a restricted category in the business licence so this is a great opportunity for you start a property management business to manage short term rentals for others.
A con of short term rental is that you are normally responsible for the utilities and so there is a risk that you can have high utilities bills if your guests leave the ac and lights on all day and night. You can counteract this by putting a meter on your ac and come to an agreement with the guests for a certain amount of daily usage and thereafter the guests must pay for the extra usage. Alternatively, you can put controls in place that will trigger the ac to go off when the guests leave the room.
Another disadvantage is that the short term rental can be very competitive and you may be forced to reduce your price or you may not get your place rented because the market can be glutted.
Another disadvantage of short term rentals is that if guests are not happy with your place, they will write negative reviews and this will drive away future renters thus reducing your short term rental income.
Pros and Cons of Long-term rental
An advantage of long-term rental is that you will get your place rented because people are always looking for a rental place. However, be conscious of the fact though that everything does not last forever and so it possible that the demand may decreased.
Another advantage of long-term rental is that you can be selective in who you rent your place to because some people do not take care of your place properly.
A disadvantage of long term rental is that you may earn less income. However, because of the demand for the long term rental, some tenants will be willing to pay anything to secure a place.
I encourage individuals to focused on a rental income and build something nice. If your dream is to have your own house, that is fine but use part of your house as a rental income. Also, if you are unsure whether or not to do short term or long term rental, then do a mix of both. Rent some of your units as short term and rent the others as long term. Also remember you need a business licence to operate property rentals.
Renting overall can be stressful especially if there are maintenance issues with your place. However, in the long run, you can generate significant wealth from property rentals.