Is it a myth? Or landlords can achieve 50% higher rental yields when renting their properties on short-term vs annual rents

 

Some holiday homes (short term rental) companies are promoting the model by overpromising the yields to landlords as 50% higher than the long-term annual lease. This is an absolute myth and is not true. They are getting away with it since it is performance-based instead of having a guaranteed minimum return. The truth comes out as a surprise after having invested in high set-up costs and furniture.

Whenever someone approaches us to manage their short-term rent, our stance is that short-term rent does not necessarily get you much more than annual rent. However, here are the true advantages of placing your property on short-term rent as compared to long term:

  1. You are not going to be tied to a long-term lease that you cannot exit, unless you have a valid reason, and you provide your tenant with a 12 months eviction notice.
  2. You do not have to comply with strict limiting restrictions on any rent increase you wish to impose on your tenant. In the holiday home model, you may
  3. In case you decide to sell, you are flexible to conduct viewings with potential buyers especially in between bookings, without having to disturb a long-term tenant.
  4. The property will be very well maintained as daily check-ups and maintenance get carried out to ensure the standards follow DTCM regulations.
  5. No risk of bounced cheques.
  6. Depending on the location and size of the property, you may benefit from a rental upside of around 5%-20% more after fees as compared to the annual rent.
  7. Holiday homes perform very well during events and holidays such as expo and Eid compared to their yearly rented counterparts who were affected by not being able to increase their rents substantially due to the limiting RERA rental index cap.

There are other indirect benefits to the overall market in Dubai because holiday homes have indeed boosted the occupancy across all residential property sectors in Dubai. Dubai has pioneered, at a global scale, regulating the holiday homes industry and with such advanced regulatory infrastructure, the industry is set to continue booming year on year.

For all enquiries related to Holiday Homes in Dubai, connect with Dubai’s best Holiday Home company www.famliving.com



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