Traditional Rentals Long-Term Rentals: Why You Should Invest in Them by Nasser Mansur December 9, 2017February 7, 2019 by Nasser Mansur December 9, 2017February 7, 2019 Long-term rentals are a top choice among real estate investors for a number of different reasons. Real estate investing has different options that can suit the specific needs of any real estate investor. However, despite the very wide variety of real estate investments out there, rental properties remain at the top of the real estate investment ladder. So, what are rental properties, what’s the difference between short-term and long-term rentals, and how can you find the best income property to invest in right now? Let’s find out. Rental Properties The most popular type of real estate investment properties, a rental property is an income property that a real estate investor can purchase for the purpose of renting it out to tenants in exchange for rent. The income that is generated through a rental property is referred to as rental income. There are multiple ways that a real estate investor, property owner, or a landlord can charge rent. In rare cases, some landlords choose to charge their rent on a nightly basis, while others choose to charge it on a weekly basis. Generally, charging rent on a nightly or weekly basis is a more common choice for short-term rental properties. Most commonly, rent is paid on a monthly basis, especially when the landlord and the tenants sign a lease for a duration of six or more months. Renting out properties for over six months means that they are being rented out traditionally, making them long-term rentals. Short-Term and Long-Term Rentals There are two main types of rental properties based on the duration of the lease or stay of the tenants. Properties that are rented out for the duration of days, weeks, or up to six months can be considered as short-term rental properties. Meanwhile, properties that are rented out for over six months are generally considered as long-term rentals. Long-term rentals, also known as traditional rental properties, are among the most popular types of real estate investments, and they have existed for as long as real estate itself. Short-term rental properties, on the other hand, are a relatively new concept in the real estate investing business, and a variety of websites and services have emerged specifically to facilitate the process of renting out income properties for short-term stays. Among these services are: Airbnb HomeAway Despite short-term rental properties becoming an extremely popular choice for real estate investors, there are a number of challenges and disadvantages that can arise when trying to invest in a short-term rental property. For example, in the US, there are a number of states and cities that have enforced laws and regulations that restrict short-term rentals and limit the amount of time that a real estate property can be rented out to short-term tenants over the duration of the year. For this reason, long-term rentals remain as a top choice for most real estate investors due to the security that they provide and their low rate of risk, as well as their ability to provide the landlord with a stable rental income for a long duration of time. Related: Real Estate Investing 101: Long-Term vs. Short-Term Rentals What Are the Advantages of Long-Term Rentals? The biggest advantage of any rental property in general and long-term rentals, in particular, is cash flow. An income property’s cash flow is the rental income that it generates on a monthly or an annual basis. The income property’s cash flow can either be positive (earning money) or negative (losing money). A real estate investor or a landlord needs to manage his/hr investment property, finances, and expenses properly in order to achieve a positive cash flow on his/her income property at all times. The cash flow of a rental property can be affected by a number of different factors: Expenses Taxes Mortgage Payments Maintenance Costs Occupancy Rate These are factors that directly affect the amount of negative or positive cash flow that a rental property is making. While expenses, taxes, mortgage payments, and maintenance costs are all subtracted directly from the rental income in order to give the value of the cash flow, the occupancy rate or vacancy rate are calculated as a percentage of time that a rental property remains vacant throughout the year, and that percentage is then subtracted directly from the rental income. Another great advantage that comes with long-term rentals is the ability to hire professional property management to manage the property and tend to the tenants, in addition to a number of different services that a professional property management company can provide. Finally, long-term rentals typically have a higher occupancy rate due to being leased out to tenants for longer periods of time, giving landlords enough time to prepare for a turnover and find new tenants to rent the property out to as soon as it becomes vacant. Related: The 8 Most Important Benefits of Long-Term Rentals How Can You Find the Perfect Long-Term Rentals for Your Real Estate Investment? While there are a number of great websites and services that can help you locate rental properties around the globe, Mashvisor can provide you with a platform and a number of great real estate investing tools that can help you find income properties across the US based on a number of search filters as well as a complete set of data analytics related to the projected returns of the property, its cash flow, its occupancy rate, cap rate, and cash on cash return. Using Mashvisor, you can search for income properties based on your individual budget and finances, while also filtering out any properties that have an undesirable cash flow or rental income. Related: What’s the Best Option on the Market for Short-Term Rentals? To Sum Up Rental properties, both long-term rentals and short-term ones, are a top choice among real estate investors due to their versatility, low-risk rate, and the rental income that they can generate. If you’re interested in finding the perfect rental property, becoming a landlord, and enjoying a positive cash flow, then Mashvisor is the best choice for you. Head over to our sign-up page and start searching for your next big investment right now! Start Your Investment Property Search! START FREE TRIAL Start Your Investment Property Search! START FREE TRIAL AirbnbCash FlowInvestor ToolsRental Strategies 0 FacebookTwitterGoogle +PinterestLinkedin Nasser Mansur Nasser is an experienced content writer with a degree in English Language and Literature. He loves writing about all aspects of the real estate investing business with focus on market and property analysis and the best sources which every real estate investor needs in order to succeed. Previous Post Should You Invest in the Miami Real Estate Market Any Time Soon? Next Post Real Estate Investing for Beginners: How Much Cash Flow Is Good for Rental Property? 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