Weekly rentals vs Monthly?

[Dane Delatte]

My 26 unit apartment complex currently charges weekly rates and has seen a slight drop off in rent since the crisis began but not as big as I first thought it would. When I read articles and watch videos of other landlords I feel lucky to have it only drop off slightly as it did, but I still wonder if it would be better if i were charging per month. 

So my question is in the time we are currently in do you think it would be better to stay with my short term rentals or does the market seem to be going more in the direction of longer term rentals and should I switch to longer term to maybe protect myself more?

[Daniel A.]

Hello Dane,

I have always felt that long term rentals were more beneficial to the investor. You lessen the opportunity for vacancies. But I do not own an apartment with 26 units, so I could not speak to a larger scale operation. 

My simple thought process would be that, if you're dealing with a higher number of vacancies, you should offer an assortment of leasing options. You don't want to detract someone who may want a 6 month rental by offering weekly or monthly options. And vice versa. But it largely depends on how you have your business set up. You can likely charge more for the short term rentals, but do they stay rented, and do you deal with more vacancy? Sometimes those vacancies consume the profit you made on the short term rental.

As to making the choice based upon the market, it's tough to say. There will always be a market for rental properties. People can't always afford to get a mortgage. Even during these tough times, there will be people with jobs and there will be people who need housing. A lot of people are not risking moving because of the fear of the unknown. With all the different information (true and misleading alike), people are burdened with misconceptions about newly implemented policies and what have you. 

You offer the community a housing solution. Have you always done short term options? If yes, what is the reason for that? Have you had success with doing weekly rentals? Are you in an area where you have a lot of nomadic travelers who want something a little more homey than a hotel?

To end, I will simply reiterate: When you're dealing with larger vacancies, sometimes it's best to broaden your options. It is hard to determine what the market will want when we are going through such uncertain times. When you get new tenant applications, ask them what they're looking for in a rental. Send out surveys online asking people what they want. Reach out to the community and see what they're in the market for.

I wish you the best of luck and I hope that you get those vacancies filled.