Hawaii has always been a popular tourist destination. In Kona, we have gorgeous beaches and tons of recreation and water activities to keep tourists and residents busy all year long. With so much travel, many property owners wonder whether they should be renting out their homes in the short term to tourists and guests or whether it’s better to look for a stable, long term renter.
We get this question a lot, and before you decide, it’s important to know what will work best for your Kona real estate investment goals.
Short Term Leases and Kona Vacation Rentals
One of the benefits to renting your property out in the short term is that you have more options. If you’re planning to move back into the home or you think you might want to spend some time here yourself during the year, a short term lease is better. You can keep the home for yourself, your family members, and your friends whenever you want it, and rent it out to tourists when it’s empty.
You can usually earn a little more money for the property if it’s rented for a shorter term. A lot of landlords do really well renting their properties out nightly, weekly, or monthly. It’s easy to generate some good cash flow this way; what you earn per night is much higher than a monthly rent that comes in through a traditional 12-month lease.
However, short term rentals can also be risky.
For example, short term leases require a lot more time and attention from owners. You’ll have to be committed to marketing the home for new tenants and getting them in and out every few days, weeks, or months. You’ll have to handle the rental agreements and make sure the property is in good condition during each turnover. It takes a lot of time.
You also have the potential for longer vacancy periods. The property won’t always be occupied, which means you won’t always be earning money on it. This increases the pressure to find tenants. There will be vacancies in the slower tourist months, and it will add up to a loss that may exceed the extra rent you earn during periods of occupancy.
Long Term Kona Real Estate Leases
One of the benefits to renting a property out for the long term (which is the standard 12-month agreement) is that most good tenants are seeking such a home. They are looking for a stable property that they can call home for a year or longer. You’ll usually find tenants who are going to renew their lease agreement after the first 12 months.
With most long term leases, average tenants will stay in place and help you take care of the property. You won’t have to cater to them as much as you do when you have short term guests in place. You’ll have an even better chance of renewing the lease agreement year after year when you provide a safe, comfortable, and well-maintained home. Long term tenants add some longevity and stability to your investment.
Long Term Leases Tend to Earn Investors More
Short term leases are best put in place when you’re working with a professional Kona property management company that can take care of turnovers, marketing, cleaning, and maintenance. We are happy to provide that service for our owners.
We also enjoy working with long term leases. Many investors find this model to be better for them, and we can help you manage your long-term rental property. You’ll enjoy a consistent rental income while the value of your Kona rental home appreciates. Every investment property is different, but your ROI will likely be greater than what it is with your short term rentals, especially if you’re following the advice and direction of your experienced property manager.
We would be more than happy to discuss your unique situation. Please contact us at Hawaiian Dream Properties.