Monthly Rentals vs. Short-Term Rentals: Which to Choose to Maximize Profit?

For property owners, the decision between offering monthly (long-term) rentals or short-term stays (like Revisit or vacation rentals) can significantly impact income, workload, and long-term success. This guide dives into the pros, cons, and strategies for both options, helping you make an informed choice tailored to your property and goals.

1. Key Differences at a Glance

A) Income Potential

• Short-Term Rentals:
  • Higher nightly rates: Earn 2–3x more per night compared to monthly rates.
  • Seasonal spikes: Peak seasons (summer, holidays) can generate surges in revenue.
  • Flexibility: Adjust pricing dynamically based on demand.
  • Risk: Income fluctuates with occupancy rates (e.g., 60–90% occupancy is typical).
• Monthly Rentals:
  • Stable cash flow: Predictable income with 12-month leases.
  • Lower overhead: Fewer turnovers, cleaning, and maintenance costs.
  • Consistency: No vacancy risks if tenants stay long-term.

B) Occupancy & Effort

• Short-Term:
  • High turnover: Requires frequent cleaning, restocking, and guest communication.
  • Marketing effort: Listings need constant optimization.
  • Guest vetting: Screen for responsible guests to avoid property damage.
• Monthly:
  • Low turnover: Tenants stay for months or years, reducing workload.
  • Simpler management: Fewer check-ins/outs and less frequent maintenance.
  • Tenant screening: Critical to avoid problematic renters (e.g., background checks).

2. Factors Influencing Profitability

A) Location

• Urban areas (e.g., city centers, business districts):
  • Short-term rentals thrive due to tourism and business travelers.
  • Monthly rentals appeal to students, professionals, or remote workers.
• Rural/vacation destinations (e.g., beaches, mountains):
  • Short-term dominates (weekend getaways, seasonal tourism).
  • Monthly rentals may attract remote workers or retirees.

B) Property Type

• Studio/1-bedroom apartments: Ideal for short-term stays (couples, solo travelers).
• Family homes: Better suited for monthly rentals (stability for tenants with kids).
• Luxury properties: Can command premium rates in short-term markets.

C) Legal & Regulatory Environment

Often subject to tenant protection laws (e.g., eviction rules, rent control).

Short-term challenges:

Many cities restrict short-term rentals (e.g., permits, occupancy taxes, bans in residential zones).

Compliance costs (e.g., licensing, safety inspections).

Monthly rentals:

3. Financial Breakdown: Case Studies

Case 1: City Center Apartment (2-bedroom)

• Short-term:
  • Nightly rate: 150€
  • Occupancy: 75% (22 days/month)
  • Monthly revenue: 150×22=∗∗150x22=∗∗3,300**
  • Costs (cleaning, fees, utilities): ~800€
  • Net profit: 2,500€
• Monthly:
  • Monthly rent: 2,200€
  • Costs (maintenance, property tax): ~300€
  • Net profit: 1,900€

Verdict: Short-term yields higher profit but requires active management.

Case 2: Suburban Family Home (3-bedroom)

• Short-term:
  • Low demand (few tourists).
  • Monthly revenue: ~1,500€ (50% occupancy).
• Monthly:
  • Rent: 2,500€ (stable, long-term tenants).
    Verdict: Monthly rentals are more profitable here.

4. Hybrid Strategies to Maximize Earnings

A) Seasonal Switching

• Rent monthly during off-peak seasons, switch to short-term during high-demand periods (e.g., ski resorts in winter).

B) Corporate Rentals

• Target business travelers needing 1–6 month stays. Balances higher rates with lower turnover.

C) Rent Rooms Individually

For large homes: Rent unused rooms short-term while living there.

5. Legal & Tax Considerations

• Short-term:
  • Collect and remit occupancy taxes (varies by region).
  • Report income as self-employment/business revenue.
• Monthly:
  • Rental income is typically taxed as passive income.
  • Deduct mortgage interest, repairs, and depreciation.

Always consult a local accountant or lawyer to navigate regulations.

Conclusion: Which Is Right for You?

• Choose short-term rentals if:
  • Your property is in a high-demand tourist/business area.
  • You’re comfortable with hands-on management or hiring a property manager.
  • You want to maximize income during peak seasons.
• Choose monthly rentals if:
  • You prefer steady, predictable income with minimal effort.
  • Local laws restrict short-term rentals.
  • Your property appeals to long-term tenants (e.g., families, professionals).

Pro Tip: Test both models! List your property for short-term stays first, then switch to monthly if occupancy is inconsistent.