If you own a property and want to give it a second life, you have probably already asked yourself what is more profitable: a tourist rental or a long-term rental?
First of all, it is important to be clear about the main difference between these two types of rentals. A holiday rental is understood to be a short-term rental, in which the guests use the property on an occasional and sporadic basis. Guests are visitors.
On the other hand, a long-term rental, as the name suggests, is a rental for a long period of time. The property is given to the tenants and they take it as their own home for the duration of the contract. The tenants are therefore inhabitants.
Once this is clear, we proceed to analyse more specifically the details that determine what is most profitable to market the property.
– Contract
Currently, according to the latest modification of the LAU (Ley de Arrendamiento Urbano) in 2019, it is established that the duration of the long term rental contract is extended to 5 years. This therefore means that the tenant can use the property for at least 5 years, until both parties decide not to renew it. During this period of time the landlord “loses authority” over the property.
In holiday rentals, on the other hand, the contract is of short duration and very flexible. The owner has greater control over the property, and is aware of all booking activity. It is a format that is more adaptable to the needs of the owners.
– Usability
As mentioned above, in a long-term rental contract, the owner of the property will only be able to use the property when the rental contract ends. If he/she wants to access the property before that date for any other purpose, it must be with prior authorisation and notice to the tenant.
With a holiday rental, the owner can make personal use of the property and can enjoy his or her stay for up to 30 days a year. In this way, the property remains completely yours and you can make the most of it when it is not in use.
– Revenue
Among the differences between a long-term rental and a tourist rental in terms of price, the most important is the periodicity.
In holiday rentals, as it is a short period of time, the price is stipulated per night. In general, this means a higher income. In addition, this price may vary depending on the season, the area of the accommodation or the services offered in the accommodation. A seasonal rate can be established to maximise the benefit. It is important to emphasise that it is usual for payment to be made in advance. In this way, reservations are better secured and there is a guarantee that the property will be used for as long as possible.
In conventional renting, a monthly payment is usually made. The same for the whole year and the payment is usually made afterwards, that is to say, once the month’s stay is over, the tenant must pay the rent. This leads to a higher risk of non-payment, as it is not paid in advance, as is the case with holiday rentals.
-Maintenance and control
If the guest wants to paint the walls, decorate, renovate… This will only be possible in a conventional rental contract, in which it is the tenant who makes the property his or her habitual residence and who can do what his or her contract establishes by reaching an agreement with the landlord. This will only not be possible in cases where a much stricter agreement/contract is established.
In tourist rentals, on the other hand, it is the owners who are in charge and make the decisions about everything related to the property. Nothing can be changed without their supervision.
Likewise, in holiday rentals, cleanliness is a regular occurrence as the property must be constantly prepared to receive new visitors. This helps to maintain the property in good condition over time.
In a conventional lease, the tenant is responsible for the condition and frequency of cleaning.
These are some of the main differences between a tourist rental and a long-term rental. The differences between them are quite noticeable and so is the profitability. In a holiday rental the owner still has all rights and use of his property, but in those moments when it is uninhabited he can market it and make a great profit.
If you also choose to have it managed by a company like HomeForGuest, you will not have to take care of anything and you will be able to enhance your property without any worries and increase your income to the maximum.