Dubai has emerged as one of the most sought-after travel destinations, whether for a business traveller or a leisure-seeking tourist.
The has the eyes of the world on it and with the escalation in travel, what we are witnessing here is a significant interest from those opting for rental stays. The lure of this city entices many a traveller to create a residential base for frequent visits. This is a very lucrative opportunity for property owners in Dubai, creating business opportunities out of such stays and earn additional rental incomes.
Taking this discussion further, let's look at two important factors worth pondering over - short-term versus long-term rentals. A lot of factors need to be considered before deciding a rental plan that suits one's needs - net profit, frequency of bookings, location of property, property management, maintenance cost, and flexibility being prerequisites.
Let’s say that if you let out a property for short-term purposes at Downtown Dubai, one would generally earn an additional income of about 33 per cent over 3 years versus renting long term.
Another factor to consider when contemplating between the two is the lack of flexibility when raising the rent. One-year lease agreements have a price attached to them that ought to stay rigid throughout the term, which means the probable cash flow from a rental property is restricted.
On short-term rental opportunities, one is actually increasing the probability of fetching better returns because you can have the flexibility to increase the rental based on demand. Let's go through some points for further clarity.
Potential for higher gross income
An property owner with a short-term rental home can easily adjust the rent price to meet current market rates, helping to maximize gross rental income. Based on demand, a short-term rental property may generate 3-4 times the rent on a long-term rental.
Short-term rentals make regular home management a breeze. By hiring a property management company one can outsource services that include furnishing, utilities, setup, and other housekeeping services, without the pressure of self-maintaining it or relying on tenants to do so. When talking about maintenance in the case of long-term rentals, it can be cumbersome to manage.
Another pivotal benefit in opting for a short-term rental is having an option at hand for selling the property.
No risk of an unqualified tenant
Even with all the due diligence processes in place, the chances of a property owner dealing with a toxic tenant are high on long-term rentals. It could lead to delayed rents or be a cause for damaged property. Evicting a long-term tenant is time-consuming and an expensive proposition.
We see a lot more propositions in opting for a short-term rental plan with a chic property that is churning out income without getting worn out.
It would be a good idea for property owners to experiment with given the explosive growth in tourism for Dubai - and make those extra bucks.