Most landlords in Detroit seek out long-term renters for their homes. This ensures that the property owner will have a consistent source of income and a set of residents he can trust. With this in mind, there are benefits to short term rental contracts that could persuade you to look into other types of tenants. This may be a better business decision in the end.
Could you make more money with short term rental contracts in Michigan? Let’s find out…
Defining “Short Term”
In some cases, a short term rental may be one to three months. In others, it’s a year. For the purpose of this article, we’ll assume that you want to rent out your property for a full year. Otherwise, you may want to set up your home as a vacation rental. In peak seasons like spring and summer, Detroit vacation rentals can bring in a lot of money. They are not nearly as reliable as year-long rentals though. Most landlords find it easier to work with tenants one year at a time.
The Benefits of Short Term Rentals
Here are some of the perks that come along with short term renting in Detroit:
- The opportunity to raise your prices – If the metro Detroit rental market is doing particularly well one year, you can increase the price of your rent to reflect that. You cannot do that if you have someone locked into a contract for more than one year.
- The chance to upgrade your property – If you want to do some remodeling to make your home more valuable, you can avoid letting people move in for one month and complete whatever project you have in mind. This is a great investment idea if it ultimately leads to higher rent.
- The ability to find better renters – If you don’t want to go through the process of evicting your current tenants, having a short term contract with them will ensure that they leave quickly. You can choose not to renew their contract for the following year.
- The option to sell your home – If homes in the Detroit area are selling well, you could take this opportunity to sell your property and get out from under your mortgage. Many of our clients at Mutual Property Management rent for a short period of time so they can maximize their profits when it becomes a seller’s market.
As a whole, the benefits come down to money. You may have a chance to make more money by keeping your rental contracts short. There is a bit of a risk doing this because all of the benefits above could be reversed. From our experience though, this process usually works in the landlord’s favor.
If You Choose Long Term Contracts…
If you are going to choose to offer long term Detroit metro rental contracts, make sure that you select tenants you can count on. They should have steady employment and a genuine desire to settle down. Young married couples and retired individuals are perfect candidates for this. Students at the University of Detroit Mercy may not be established enough to handle a multi-year rental.
You may offer a slight discount on rent for people who sign up for more than one year, if you want to entice them to do this. Your tenants will be inclined to lock in a good rate. You may not make quite as much this way, but you will have stability to rely on. For some Detroit landlords, that means more than anything.
Contact Mutual Property Management to determine which rental setup is right for you.