Thoughts on longer rentals?

Question

We are less than a year into the STR thing with 2 separate rentals. So far, just love it.... no issues, just wonderful guests and lots of bookings.

The one thing that comes up occasionally is requests for long-term bookings. We have the filter set to allow only 2 week bookings without contacting us first. We've had several people that want 1 month/2 months/3 months and the money is initially tempting. But then they always want a (sizeable) discount. And I kinda like the ability to get in the houses frequently and do a cleaning/inspection.

Thoughts?

Dave Stokley · Answer

I understand your concerns and they are certainly valid. What I'm saying is that when something bad happens to someone else there are alternatives to either (a) plowing ahead recklessly down the same path, or (b) running away and not looking back. Can you get burned with a medium-term rental? Yes of course. But you can just as easily get burned with a one-nighter, an LTR, or investing with Bernie Madoff. There are also things you can do to protect yourself, like have a more detailed contract, taking a deposit, and even do a background check.One thing I find hard to imagine is someone coming in and spending several thousand dollars up front with the premeditated intent of squatting. I just can't see people who would do that having that kind of money to put down up front. It has to be an exceedingly rare situation.Anyway, I absolutely agree that you need to think through how to protect yourself, but I wouldn't simply dismiss the idea out of hand because one person got screwed doing it.

Joe C. · Answer

Please do not do this. If you are intent on doing this, please read every single entry on this bigger pockets thread: https://www.biggerpockets.com/... This case got national attention. Just google "Palm Springs AirBnb squatter". This is unfortunately not the only instance of this happening. Your state's landlord and eviction laws apply at some point, you better know when that is because you could be in for a rude awakening when you are expecting your guest to leave. For every case of this happening, I'm sure there are 99 cases of trouble free longer term guests. Just be prepared to be that 1. Like you said, there is value in getting in there regularly to touch things up, clean and do normal maintenance. If you do this in the off season make sure you block some time after they check out before the short term guests start up again to fix the place up again. I would not do this in prime season, why take a discount?

Dave Stokley · Answer

There were also 5 fatal plane crashes in 2020... should we stop flying too?

Joe C. · Answer

All I can say is I read every post on that thread and I would not do it after reading them. Maybe if there was a forum thread where people detailed all their horrors of plane travel and you read hundreds and hundreds of posts about people dying, pilot fraud and mechanical failures then you might stop flying.We are in the middle of a global pandemic with rent controls and eviction moratoriums and there are a lot of people in bad situations right now. To think that someone unable to get rental housing might try to scam a short term rental into a long term rental situation where they cannot be evicted is not exactly unreasonable.A person running a short term rental is subject to completely different laws than a long term rental. To be completely unaware of what those laws are and just say "what the heck why not?" is probably not the most prudent plan. There are long term leases that are dozens of pages long for long term housing that cover every item imaginable such as who is responsible for clogged drains, broken appliances, landscaping maintenance, etc. none of which are likely to be in a short term lease. Long term renters go through background checks, get credit checks done on them, put down a month's rent deposit, etc. To think someone could skip all that and just get placed into a situation with all the government protections of long term housing again does not seem unreasonable.OP asked for thoughts, these are my thoughts.

John Underwood · Answer

I would only do a longer rental during January and February. Too much money to be made in the other months at full price.

Carolyn Fuller · Answer

@Dave Stokley I totally agree with you. We have 2 rentals and we only do extended stay (less than a year) or short term. We use Airbnb or VRBO for short term. During the academic year, for extended stay, we require last month rent, security deposit and a lease. The only difference between our extended stay lease and a LTR lease is that we don't automatically allow for extensions.We've never had any issues with our extended stay tenants. Back in the day when we did LTRs, we did encounter an awful experience - a worst nightmare tenant, hence our switch to extended stay. I like the fact that there is a beginning, middle and end to all our rental agreements.

Bruce Woodruff · Answer

Good responses! I am still leery of long stays (although the upfront money is enticing). This particular rental is only 1 mile from the downtown square of a touristy little western town and although it has only been open for business since Feb of this year, it has stayed booked all weekends and some weekdays as well. As long as this trend continues, I think we are more comfortable with this arrangement.

Julie Sisnroy · Answer

I guess it depends on the market - I am not sure where this property is. I am very new to the STR biz from an investor perspective, but I have family that stays in them down in Florida every year. Many of the rentals there are one month MINIMUM and often people stay for 3 months (Feb-April). There are for snow birds and often the same people come every year. I don't believe there is a huge discount (unless $6-9k a month is a discount for a 2/2 condo on the beach). Some people don't want the inconvenience of staying in a hotel for that long or don't want the hassle of owning. I wouldn't immediately dismiss this as a squatter situation or a non-starter, but I would not discount it to the point it becomes a price you would charge for a long-term tenant. They still have a furnished place with all the day to day living requirements. Either yourself or a PM, cleaner, maintenance person or whomever you trust to watch over or check in with your property on a weekly or bi-weekly basis. All of this does not take laws and local ordinances into consideration, of that is an issue.

Dave Stokley · Answer

It's pretty easy to calculate what you need to make it worth it to host them. I had someone request six weeks in June & July. I told them what I wanted (which is basically what I would have made based on expected rates and occupancy) and they said "no thanks." Like you said, most people are going to want a steep discount, but you never know when someone will have an unlimited budget so it's always worth making an offer.

Carolyn Fuller · Answer

I'm in an urban setting and actually shut down my Airbnb listing to any short term rental for the last year. Before I reactivated the listing for short term stays, I heard a rumor that, during the pandemic, urban units were getting fewer requests for short term rentals and more requests for longer term stays, along with guests wanting high speed wifi and workstations. So I specifically went after that market, adding a workstation to the listing and offering discounts on longer stays but it is all within Airbnb. I have refused to negotiate with guests outside Airbnb. The summer is close to completely booked and I don't expect any issues. Last summer, a visiting nurse booked for 2 months and I have had a few month long bookings in past years. I've never had any issues but, as I said, I would never negotiate with prospective guests who send an inquiry requesting lower rates.