which is better

Which is a better option? Short term rental agreement or long term rental agreement?

Today international Property sales volume reaches around $500 Billion usd volume around the world. Singapore, Hong Kong, Dubai, Istanbul, London, Miami, and Toronto and Los Angeles are top centers of this international investment flow; meanwhile Phuket, Bali, Alanya, Antalya, Bodrum, Greek Islands, South(Greek) & North(Turkish) Cyprus, Marbella, Ibiza, Budva, Alexandra, French Riviera and Tulum have come forward as vacation home concepts in recent period. 75% of foreign investors purchase their properties as holiday home or investment wise; only 25% of investors purchase for permanent living or part-time residents which they do not want to give a rent.

When investors purchase a Property in their own country or abroad; the most important point is the after sales process. After proper documentation, title deed transfer, and handover of the unit, the first question is as all we can guess: find the correct tenant which is the most sensitive point to have less headache during the ownership + to get maximum ROI to create satisfaction and benefits for investors. We will have a look at the positive and negative facts of both scenarios as short term and long term rental options and see the efficiency of both variations.

Short term rental agreements are accepted around the world for a period of less than 90 days.
Especially after airbnb, booking, Expedia etc. portals became so popular in the last 10 years. The positive point of short term rent of course flexible pricing depends on season or some special events time like fairs, exhibitions, concerts, festivals etc; meanwhile the owner can update the prices even as weekdays or weekends; and as we can guess renting somewhere as short term averagely more expensive than whole year rent, also owner can use the apartment in some specific period: Assume that investor is living in NY and has a flat in the center of Istanbul. This investor comes to Turkey twice a year. He can keep his unit empty in these particular periods and use those dates. It also provides that the owner may check his Property during the period.

But of course there are some negative points of this method: The maintenance fee of the unit will be much expensive than long term rent because each tenant changes the unit should be prepared for new tenant and it increases the house keeping costs plus the owner should renew the furniture and other fixtures shorter period, also the short term tenants might use the house a bit messy and it creates another cost to the owner.

Long term rental agreements are called for in a 90 days rental period. This option is more popular in large complex projects and also provides regular income for the homeowner. Also if the homeowner finds the right tenant it provides a long years hustle free investment.

There are main points to choose short or long term rental options as below:

Location: Most of the short term rental options settled in the Central or touristic locations. If the investor’s Property is not in Central location or has easy access to center we are not recommending short term operation. It doesn’t provide desired profitability.

Building type: Most of available for short term properties are as hotel service apartment complex, stand alone historical building etc. If the investor would be the one in the specific building who tries to give short term rent; there might be problems with neighbors or building management.

Unit Type & Size: As we can guess, most of short term units are studios or 1+1 type of units and must to be fully furnished with all equipments like kitchenware, towel etc.; on the other side, most 2 or 3 bedroom tenant candidates desire unfurnished apartments because most of the residents have their own furniture. That's Why it’s another sensitive point and if a 3 or 4 bedroom apartment is desired to give rent short term it might be empty for a long period.

Written by Mr.Ersin Oksuzoglu .Founder of EOS Turkey Property
Other Articles
How to buy property online.Full guide to buying real estate online?
New Expertise report regulation and suitable project's for Nationality.
Dubai vs Istanbul