Long Term Rental Versus Vacation Rental
When most people think about buying an income producing property in the Caribbean, they think of something on the beach. This is always a smart investment if you can afford it; oceanfront homes do not come cheap. But does it make sense to buy a cheaper property off the beach for the long term rental market?
This is a tougher question to answer, and obviously it will be location specific. In places like the Turks and Caicos and the Cayman Islands, it absolutely can, if you buy the right property. There are always expats looking for accommodation, and rentals are not always readily available. Many homes that were purchased for long term rental get converted to vacation rentals due to the extra income potential, this dries up the long term rental market.
Benefits of Buying a Long Term Rental
Your income potential will always be higher with a vacation rental, assuming you have a suitable property. However there are benefits to letting long term. Here are just a few:
- When you rent out long term, you have a steady flow of income that is not seasonal like the vacation market.
- Wear and tear can be less on your property, as people are not coming and going every week.
- Having a vacation rental is a lot of work, whether it be finding new clients or simply managing their needs. Long term renters generally only need you if something goes wrong.
- If you are not on island, you will need a property manager for your vacation rental which can cost as much as 50% of your rental income. A long term rental usually only costs 1 month rent (sometimes less).
- Long term rentals require less investment and less upkeep.
Financing a Long Term Rental in the Caribbean
For our lenders, financing a long term rental is not an issue. As long as the home is highly marketable, in a good area, they are happy to entertain. Talk to us today about all our financing options for buying a long term rental.
