Renting your home or secondary property out is a fantastic way to make some extra cash quickly and consistently. A common misconception, however, is that the length of time you lease the property for doesn’t matter to your overall income. This couldn’t be further from the truth. If you’re considering renting out one of your properties, you should educate yourself on the pros and cons of short term rentals versus long term rentals.

People tend to stray away from the idea of short term rentals because they create a riskier situation for the property owner than a long term rental does. Long term rentals mean a secure income for the foreseeable future alongside less stress when it comes to finding new tenants when the previous ones move on. The problem is that people only look at these two options on the surface. If you’re going to rent your property out, you need to take an economic point of view to the circumstances.

Short term rentals are typically classified as those that are 6 months or less. These short leases work better in areas where demand for space is greater than the supply. If there is a high demand for rental property it ensures that property owners have a large pool of new tenants to choose from once current ones leave. It’s hard to imagine a high demand for property, but with today’s open source traveling websites like AirBNB there are people from all around the world looking for a place to stay for the summer, winter, or any other short holiday. In fact because of websites like these, short term rentals are becoming the norm because people are beginning to prefer the comfort of a home while on vacation over the stress of a hotel.

Another benefit of short term rentals is that property owners can charge a higher nightly rent rate (meaning a higher monthly rent) than they would with a long term rental. Renting out your property is like anything else in life: if you buy in bulk you get a discount, but if you buy little you pay more. A tenant who is planning to stay for over a year will expect a lower monthly rent charge due to the fact that they know they are offering a sense of security to the property owners. A tenant who is only renting a home for the summer, however, will pay more for the same exact property because they know it’s only making a dent in their pockets for a couple of months instead of a couple of years. Something to keep in mind when it comes to income is that if rent prices are already on the rise in the economy, property owners want short term rentals because they can charge a higher rent price with each new lease. In the grand scheme of things, short term rentals will provide a homeowner with a greater amount of income than a long term rental would.

When it all comes down to it though, the choice of what kind of rental period is right for you depends on your financial needs. If you’re renting out a property just to make some extra cash when you can, then short term is the direction you should go and you could end up making big bucks if you rent when the economy is on the upswing. If you’re renting out a property because you’re strapped for cash or trying to save up for your own family vacation, a long term rental may be better because it ensures you have a steady extra income flowing in every month. It also entails less work on your part, so if you’re a busy person already you may want to choose a long term rental solution. Regardless of what you decide, you’ll be making some kind of extra income, and that’s always a plus!