If you own multiple properties, hiring a management company can help you make the most of your investments. Two great ways of boosting your income include setting up a holiday let and organising a guaranteed rental agreement.
Each approach has its own pros and cons. For example, holiday lettings may result in higher profits – however, your income may vary drastically with the seasons. Guaranteed rent, on the other hand, is much more stable.
In this post, we will discuss the benefits and drawbacks of guaranteed rent vs. short-term holiday rentals. Read on to find out more!
What is a Holiday Let Management Company?
A holiday let management company helps landlords to manage their properties for short-term rentals. This may be carried out privately or through platforms such as Airbnb and Booking.com.
With this approach, you’ll host guests for short periods of time, rather than long-term or permanent tenants. The management company will take care of all the necessary tasks like advertising the property, collecting payments, dealing with guests and cleaning in between stays.
When somebody comes to stay, the holiday let management company takes a cut of the fee as commission. This is normally around 15-20%.
Why Use a Holiday Let Management Company?
If you live in an area that’s popular with tourists, renting out your property as a holiday let is a great idea. Many landlords prefer this as an alternative to letting out the building as a permanent residence. For example:
- You don’t have to worry about ‘problem tenants’, as each guest will only stay for a short break (a few weeks at the most)
- You can ask guests to pay for their stay up front, and establish a late cancellation fee to help reduce lost revenue
- The potential yield for a holiday let per week is typically higher than a long-term residential let or guaranteed rent agreement
- You may be able to charge more during the summer months (peak tourist season)
Hiring a holiday let management company is much easier than conducting the whole operation yourself. They will take care of everything for you, including handling bookings, liaising with guests, collecting payments and cleaning the property.
There are two downsides to this approach, however. Firstly, you will have to pay the management company a fee for their services. Secondly, as the rental periods are short, there may be periods when your property is empty – especially during the off-season.
What is Guaranteed Rent?
If the ups and downs of holiday lettings don’t appeal to you, you may prefer the idea of a guaranteed rent agreement. This is a type of contract with a property management company allowing them to sublet the residence, either as a long-term or short-term let.
The company will take a certain percentage of whatever the property generates. In exchange, you’ll be guaranteed a monthly income, which won’t change for the duration of the contract (typically 3-5 years).
You won’t be responsible for advertising the rental, communicating with guests or tenants, or maintaining your property. The management company will do all of this for you.
Why Use a Guaranteed Rent Service?
Using a guaranteed rent service is a great idea if you’d prefer a steady income from your property. The guaranteed rent provider will pay you a fixed amount each month, regardless of how much income is actually generated from the rental.
This provides invaluable financial security. You can rely on a steady income stream year-round, even during periods when your property is unoccupied.
The main downside of guaranteed rent is that it may not be as lucrative as a short-term holiday let. You also may not have as much of a say in who rents your property. However, many landlords feel that this is a small price to pay for peace of mind of a guaranteed income.
Guaranteed Rent vs. Short-Term Holiday Lets: Which Option Should I Choose?
Whether you’ve inherited a second home or bought one, the choice between guaranteed rent vs. using your property for short-term holiday lets is a personal one. It all depends upon your individual needs and preferences, as well as what kind of property you own.
It’s important to consider all of your options carefully and decide which one is right for you. For example, if your property is in a popular tourist area, holiday lets may be more lucrative. But if you’re worried about the off-peak season, guaranteed rent may be a safer option.
Contact 53 Degrees Property Today
If you’re looking for a company to manage your rental properties, get in touch with 53 Degrees Property. We are friendly, family-run providers of high-quality short- and long-stay accommodation across the UK.
Our guaranteed rental agreements are the perfect solution for landlords seeking a stable income, with none of the hassle of managing tenants or guests. We’ll handle everything for you, from legal contracts to cleaning and maintenance.
We understand that letting out your property is a big decision, so we’re here to help every step of the way. Contact 53 Degrees Property today to discuss your options and discover how you can maximise your potential income.
Get a FREE Guaranteed Rent Valution
Please fill out the form below and we’ll get back to you within 24 hours by call or email with a guaranteed rent quote for your property.
