Short term lettings may seem more lucrative but there is good reason for this.
As a landlord you may be wondering whether to let your property in Vietnam for a long or short term tenancy. With the rise of tourists coming to the country this poses an opportunity to profit from the holidaymakers needing accommodation. Plus as the economy is thriving, there are more business people also needing somewhere to stay.
A short term let can be a matter of days up to six months. Anything over this is a long term let. Due to the shorter period short term lettings warrant higher rent. This is attractive as a landlord and helps with generating a good rental yield. However there are a number of points to consider with short term lets:
1. Longer void periods are likely.
A long term let guarantees rent for a whole period, whereas for a short term let the money may roll in thick and fast but there are likely to be times when the property is left empty with no income being generated. Project the rent over the course of the year and account for a void period in order to see which is the better option for you.
2. More management.
Short term lets are management heavy due to the high turnover of tenants. With a long term tenant you only have to hand over the keys and explain how everything works in the property once. For short term lettings you are more likely to get people who treat the property like a hotel. Therefore they may not have the desire to work out how to fix something straightforward and rather just call on management instead.
3. Inclusive utilities.
It would be impossible to track a tenant’s utility usage if they are staying in the property for a short period of time. Or even request them to cover these costs. Therefore included in the rent for short term lettings is the cost of the utilities: electricity, water and Internet. As well as having to manage these accounts (which would not be required for a long term let) you also need to factor in that when tenants do not pay for these themselves, they are less likely to careful of usage. They may leave the air conditioning on when they are not in the property and you need to ensure that you factor these costs into the letting.
4. Fully furnished.
Holidaymakers and business travellers will want to arrive at the door with just their suitcases. For short term lettings everything will need to be provided from towels, teaspoons, bedding and electrical items such as a television. This is not always expected for long term lettings. This is an additional cost to yourself and an additional area that needs managing when items needs repairing or replacing.
5. Is it allowed?
Be mindful that some districts and buildings do not permit short let as this impacts the hotel trade. Make sure that you check what is relevant for your situation so that you are complying with local laws.