Investing in real estate

Short-term vs. Long-term Rentals — Investment Strategies

Investing in rental properties remains one of the most reliable ways to grow capital. Choosing between short-term (tourist, Airbnb) and long-term (annual or multi-year) rentals determines the level of involvement, expected return, and risk profile. Short-term rentals can bring higher seasonal income but require active management and frequent guest turnover. Long-term rentals offer income stability and lower operating costs but usually have lower monthly rates. Below, we compare both models and present strategies to help you maximize profits with minimal time and capital investment.

Match the location to the model

• Short-term: Choose tourist centers, proximity to attractions, or good access from the airport. High seasonality is your advantage.
• Long-term: Residential neighborhoods with infrastructure (shops, kindergartens, public transport), where apartments appeal to families and professionals.

Revenue and cost analysis

• Short-term: Include service fees (e.g., Airbnb 15%), more frequent cleaning, higher utility consumption, and furniture depreciation.
• Long-term: Costs of renovation after a few years, lower tenant turnover, but fixed property management fees (agency 8–12%).

Hybrid model

Consider combining both strategies: focus on short-term rentals during the high season (May to September) and switch to long-term rentals during off-season (or target remote workers). This reduces the risk of vacancies.

Standardization and automation

• Furnish and equip the apartment with easy-to-maintain furniture — this minimizes downtime for repairs.
• Use tools for automating bookings, payments, and cleaning (integrations with PMS and cleaning staff).

Pricing optimization and flexibility

• Short-term: Dynamic pricing (yield management) — higher rates on weekends and during peak season, promotions in low-demand periods.
• Long-term: Renegotiate every 12 months, include clauses for rent increases indexed to inflation or market indicators.

Legal and tax risk management

• Check local regulations: some cities impose restrictions on short-term rentals.
• Choose the most favorable taxation form (lump-sum tax, general tax rules) and consider running a business activity.

Brand building and client relations

• Short-term: Professional photos, quick communication, extra amenities (e.g., coffee machine, local guide).
• Long-term: Maintain good relationships, respond to maintenance requests, offer contract extensions with small discounts.

Reinvestment and portfolio development

• Use profits from short-term rentals to repay loans faster or purchase additional properties.
• Stable income from long-term rentals helps build creditworthiness and plan long-term investments.

Regular performance review

Monitor indicators such as gross/net return, occupancy rate, average daily rate (ADR), and cost per guest. Analyze market changes every six months and adjust your strategy to current trends (tourism and economic).

The choice between short-term and long-term rentals should reflect your investment goals, time availability for management, and acceptable risk level. With the strategies above, you can consciously build a real estate portfolio and maximize profits while minimizing vacancies and unexpected costs.