Help decide whether short term is the best option for your investment property.
If you own a property as part of an investment strategy, it is vital that you generate a healthy rental yield. One of the ways to achieve this is to consider whether you let the property on a short or long term basis. Short term lets could be a little as a matter of days up to three months, whereas a long term let are usually for tenancies of six months plus.
Short term lettings are popular in Thailand as they cater for holidaymakers. They will generate a higher rent if calculated on a week or daily basis so many landlords are lured by these figures, however there is good reason that rents are higher:
1. Longer void periods are expected.
A long term let guarantees rent for a whole period, whereas for a short term let the money may roll in thick and fast but there are likely to be times when the property is left empty with no income being generated. Project the rent over the course of the year and account for a void period in order to see which is the better option for you.
2. More management involved.
Short term lets are more labour intensive. As part of your costs you will need to include the management costs of moving people in and out of the property, as well as cleans in between tenancies and any other requests that the tenants may make.
3. Inclusive utilities.
Electricity, water and Internet come as part of the rent for short term lets hence the rent is higher. This is also an extra area that you will need to manage. Remember that tenants who are not responsible for their utilities may not use them as efficiency and could be prone to leaving the air conditioning on. This will then hike up your costs.
4. Fully furnished.
Tenants of short terms lets will want to turn up with just their suitcase. You will therefore need to provide everything from towels, teaspoons, bedding and electrical items such as a television, which is not always expected for long term lettings.
5. Is it permitted?
Some districts and buildings do not allow short lets as this impacts the hotel trade. Therefore you need to be mindful that you are complying with local laws to avoid a hefty fine.