Long-term rental vs. seasonal rental: Which real estate strategy to choose?

Sep 23, 2024

Apartments in a Building

Investing in rental property is an interesting strategy for generating income and building wealth. But a crucial question arises: should you opt for long-term rental or seasonal rental?

Each of these options has its advantages and disadvantages, and the choice often depends on your financial goals, the location of the property, and your management preferences. Let's explore together which real estate strategy to choose.

Long-term rental: stability and simplified management

Long-term rental involves renting a property for a period longer than a year, often with a 3-year renewable lease. This type of rental is particularly appreciated by those seeking stability and simplified management.

Regular and predictable income

One of the main advantages of long-term rental is income stability. With a tenant in place for several months or even years, you benefit from regular rent payments without constantly having to search for new tenants. This allows you to better plan your finances and ensure a stable supplementary income.

For example, if you rent an apartment in Casablanca for 6,000 MAD per month, you will receive this amount every month without interruption, as long as the tenant meets their commitments.

Simplified management

Long-term rental is also less time-consuming than seasonal rental. You do not have to manage frequent tenant turnovers, which relieves you of much of the administrative and logistical tasks (inventory, key handover, maintenance, etc.). Moreover, maintenance costs are often shared with the tenant, who is responsible for routine repairs.

Reduced vacancy risk

With long-term rental, you limit the risk of rental vacancies, meaning periods when the property is unoccupied and generates no income. Once a tenant is found, you are assured of receiving rent over an extended period, reducing financial uncertainties.

The disadvantages of long-term rental

Despite its advantages, long-term rental can present some drawbacks. Rents are generally lower than those charged for seasonal rentals, which can limit your profitability, especially in tourist areas. Additionally, it may be difficult to modify the rent during the lease term, as increases are often regulated by law.

Seasonal rental: profitability and flexibility

Seasonal rental, on the other hand, involves renting a property for short periods, usually by the week or month, mainly to vacationers or business travelers. This type of rental can be particularly attractive in tourist cities or regions popular for their cultural events.

Potentially higher income

One of the main advantages of seasonal rental is the potential to generate higher short-term income. Daily or weekly rents are often much higher than monthly rents for long-term rentals, especially during periods of high tourist influx.

Example: In Marrakech, you can rent a villa for 2,000 MAD per night during the high season, allowing you to earn 14,000 MAD in just one week, which is more than double a typical monthly rent.

Flexibility of use

With seasonal rental, you retain the flexibility to use your property for your own needs. You can reserve certain periods for your holidays or family stays, and rent the property only when you are not using it. This flexibility is particularly appreciated by owners of second homes.

More demanding management

However, seasonal rental requires more time and effort in terms of management. You need to manage bookings, welcome tenants, clean between each rental, and be available to solve any problems. Some owners choose to delegate this management to a specialized agency, but this involves additional costs.

The risk of rental vacancy

The main disadvantage of seasonal rental is the risk of rental vacancy. Unlike long-term rental, where the tenant stays for an extended period, seasonal rental involves periods when the property may remain unoccupied, particularly in the low season. This can impact the overall profitability of your investment.

Comparing the two strategies: what type of property and location?

The choice between long-term rental and seasonal rental also depends on the type of property and its location. Some properties are better suited to one or the other of these strategies depending on their geographical location and rental demand.

Long-term rental for residential areas

In large cities like Casablanca, Rabat, and Fes, where the demand for housing for permanent residents is high, long-term rental is often the best option. Students, young professionals, and families are looking for apartments or houses to rent long-term, which guarantees stable occupancy and regular income.

Seasonal rental for tourist areas

In tourist areas like Marrakech, Agadir, or Essaouira, seasonal rental can offer higher profitability. Vacationers and foreign tourists are willing to pay higher prices for short-term rentals, especially during peak seasons. Properties located near beaches, tourist attractions, or resorts are particularly suited to this strategy.

The criteria to consider when choosing

To make the right choice between long-term rental and seasonal rental, it is important to consider your financial goals, the management you are ready to assume, and the location of your property.

Your financial goals

If your goal is to maximize short-term income and you are ready to take on more active management, seasonal rental can be an interesting option. On the other hand, if you prefer income stability and want to limit daily management, long-term rental is more suitable.

Your availability for management

Seasonal rental requires active management, with frequent arrivals and departures, cleaning tasks, and regular booking follow-up. If you are not available to take care of it, it is better to delegate this management to an agency or opt for long-term rental, which requires less intervention.

The type of property and its location

As previously mentioned, location is a key factor. If your property is located in a residential area or in a city with high long-term rental demand, this option is often the safest. Conversely, in tourist areas, seasonal rental can allow you to maximize your gains.

Conclusion: Which real estate strategy to choose?

The choice between long-term rental and seasonal rental depends primarily on your priorities and the nature of your property.

If you seek income stability and simplified management, long-term rental is a safe and reliable solution.

On the other hand, if you are ready to invest more time in managing your property and willing to take risks to achieve potentially higher returns, seasonal rental can be very lucrative, especially in tourist areas.

Check out the available offers on Housing Place and find the strategy that suits you best!