5 things to consider when purchasing a rental property and deciding between a Long-Term Lease Vs. Short-Term Accommodation Rental in Fort Lauderdale in 2022.
For those looking to invest in other income avenues, purchasing a rental property can be a great investment. With Covid, we have seen an incredible shift in how people think and how they want to live their lives. Quality of life really came into focus when people were forced to stay home for months on end, in isolation, with little to no human interaction. Jobs, and careers, relationships, as well as climate/weather were all reevaluated. People living up North, reported feeling trapped and lonely, with a drastic increase in depression and anxiety. Freezing temperatures, icy walkways and cloudy gloomy days made outdoor living impossible.
This transformation in thinking, caused hundreds of thousands of people to migrate to warmer climates. For the last 2 years, the demand for rental properties in Florida has exploded. Most people, who are new to the area, prefer to rent, get a feel for the area and then, if possible, purchase a property. This has created incredible demand for both short-term housing and long-term apartment rentals.
S.E Florida’s rental market is at its peak, and now is the time to purchase your investment property. Fort Lauderdale in a great location as it’s a centrally located between Miami and West Palm Beach. Being midway, between these popular destinations, allows one to explore all that SE Florida has to offer. Laudy has great schools/colleges, wonderful beaches, a rich cultural history, exciting nightlife, and all the latest shopping trends.
Once you have decided on the location of the rental property, you need to work through the pros and cons of renting it out on either a short term basis VS long term lease.
LONG TERM LEASES
For property owners, looking at renting out their income properties on a long-term basis, they should consider the following:
1. Duration of Stay: The people who rent long term, are referred to as tenants and sign a 1-year lease agreement. They will stay for 12 months and pay month to month. The property is furnished by the renters and the lessee will typically take all furniture with them when they move out
2. Income Typically, 1st month’s rent, last month and security are required, and if the tenant passes the background check, you should be able to rely on consistent monthly income. This revenue could potentially be less than a short-term rental, but it’s reliable and steady. Often, you will find that many permanent occupants will renew their lease after the 1st year, which can result in a small rent increase.
3. Property Management: If you decide to employ a Property Management Company, Smart Move Realty has a large portfolio of long-term leases, the commission charged is lower than short term rentals as the work involved is not as intense. On average, property managers charge 10% commission on the monthly rent they collect on behalf of the property owner. They are also the liaison, between the tenant and owner, if an issue or question should arise.
4. Reduced Owner Expenses: The renter will set up all utilities in their name for the duration of the lease. The property owner will not be responsible for paying for water, electric, cable, pest control, pool services or landscaping. This is a tenant expense.
5. Eviction: when there is a lease agreement/legal document between both parties, if rent is not paid and the tenant falls behind, the process to evict the renter is complicated, intensive and can be very expensive. Lawyers and law enforcement must get involved and often with emotions running high, the occupants will cause damage to the property.
SHORT TERM RENTALS
Below are the positives and negatives of renting on a temporary/ week-to-week basis:
1. Duration of Stay: Guests will stay anywhere from a few days to a month. Plans are usually influx, and guests can and do extend (providing there is availability) last minute. This will affect occupancy, as you are never quite sure how long a guest will rent for.
2. Income: the potential income on short-term fully furnished rental properties is higher than long-term rentals. The ability to adjust rates based on demand and season is a huge plus.
3. Property Management: If you decide to employ a Property Management Company, the commission charged is a little higher as there is a lot more work involved. You will find some homeowners will try to handle everything, but it becomes a full-time job and extremely overwhelming. At Smart Move Accommodations, our commission includes the following: all advertising, communications with guests from the beginning of their reservation until check-out, as well as collecting rent prior to move in and handling all extensions. Inspections are done prior to move-in, during their stay and after check-out as well as preventative maintenance. We are the liaison, between the guest and owner, if an issue or question should arise.
4. Personal Use: since it’s a seasonal rental, the property is not likely to be occupied 365 days of the year. This creates a wonderful opportunity for the homeowner to make sure of the property, especially since it’s fully furnished. Simply contact the property manager and have them block off the requested dates. It’s also a great opportunity to see the condition of the property and make any necessary improvements.
5. Eviction: this process is as easy as it comes and immediate! Since there is no lease or legal document, you can ask or have a guest removed from the property for late or no payment, damage to the property or unacceptable behavior. You do not need to hire an attorney and typically, unless the manager feels it’s necessary, the authorities do not get involved.
Smart Move Accommodations is a full-service Property Management Company that handles both long-term rental lease and short-term fully furnished rental apartments and houses.
