Short-Term vs. Long-Term Rental: Which Is the Better Fit for You?

When your second home sits empty and generates no income, the crucial question quickly arises: should you rent it out on a long-term lease or rather offer it short-term to travelers?

Short-Term vs. Long-Term Rental: Which Is the Better Fit for You?

When your second home sits empty and generates no income, the crucial question quickly arises: should you rent it out on a long-term lease or rather offer it short-term to travelers? Both options have their pros and cons. In this article, we analyze both models and help you make the decision.

Short-Term Rental: The Chance for Higher Returns

Definition and Characteristics

Short-term rental means renting to guests for stays ranging from a few days to a few weeks. Typical platforms are Airbnb, Booking.com, or VRBO.

Advantages of Short-Term Rental

Higher Income

The biggest advantage: significantly higher daily rates than with long-term rental.

•Berlin Mitte: €80–150 per night vs. €25–35 per day with a long-term lease

•Munich city center: €100–200 per night vs. €30–45 per day with a long-term lease

•Hamburg: €70–120 per night vs. €20–30 per day with a long-term lease

Flexibility

•Personal use possible

•Prices adjustable to demand

•Spontaneous availability for your own purposes

Tax Advantages

•Many costs deductible (cleaning, furnishings, marketing)

•Depreciation options

•Small-business tax scheme possible

Disadvantages of Short-Term Rental

High Time Commitment

•Guest support 24/7

•Cleaning after every guest

•Booking management

•Marketing and price adjustment

Fluctuating Occupancy

•Seasonal dependency

•Unpredictable vacancy periods

•No guaranteed income

Legal Complexity

•Registration requirements

•Permit procedures

•Tax particularities

•Liability questions

Higher Costs

•Cleaning: €40–80 per guest

•Wear and tear from frequent use

•Insurance

•Administrative costs

Long-Term Rental: Predictable Income

Definition and Characteristics

Long-term rental means renting to tenants for at least six months, usually on an open-ended basis.

Advantages of Long-Term Rental

Predictable Income

•Fixed monthly rent

•Long-term contracts

•Calculable returns

Low Time Commitment

•One-time tenant search

•Minimal administrative effort

•No daily support

Less Wear and Tear

•Gentle use

•Infrequent tenant changes

•Lower renovation costs

Legal Simplicity

•Clear tenancy law provisions

•No special permits

•Tax-wise straightforward

Disadvantages of Long-Term Rental

Lower Returns

•Lower daily rates

•No dynamic pricing

•Limited room for increases

Less Flexibility

•No personal use possible

•Protection against termination for tenants

•Long-term commitment

Risk of Rent Default

•Payment defaults possible

•Eviction proceedings are time-consuming

•Tenant damage

Comparing the Returns

Sample calculation for Berlin (2-room apartment, 60 sqm)

Short-Term Rental:

•Average price: €95/night

•Occupancy: 65% (237 nights/year)

•Gross income: €22,515/year

•Costs (cleaning, management, marketing): €6,755

•Net income: €15,760/year

Long-Term Rental:

•Base rent: €1,100/month

•Annual rent: €13,200

•Landlord's incidental costs: €800

•Net income: €12,400/year

Difference in returns: +27% in favor of short-term rental

Important: With short-term rental, income fluctuates considerably!

Decision Aid: Which Suits You?

Short-term rental is ideal if:

•You have time for active management

•You're aiming for higher returns

•You don't shy away from legal complexity

•You'd like to use the apartment yourself occasionally

•You're renting in a touristically attractive location

Long-term rental is a fit if:

•You prefer passive income

•You have little time for management

•You need predictable income

•You value legal simplicity

•The location is less attractive to tourists

Combining Both Models

Flexible Model

Some hosts combine both approaches:

•Summer months: short-term rental

•Winter months: furnished long-term rental

•Adjustable depending on demand

Mixed Use

•Primary residence: occasional short-term rental

•Additional apartments: long-term rental

Professional Management as the Solution

If you want to tap into the higher returns of short-term rental but don't want the time commitment, professional management is the solution.

Arbio takes care of it for you:

•Complete guest support

•Cleaning after every stay

•Booking management

•Price optimization

•Marketing on all platforms

•Legally compliant registration

Your benefits:

•Returns like active self-management

•Time commitment like long-term rental

•Professional service for guests

•Legal certainty

Market Situation 2025

Short-Term Rental

•Continued rising demand for individual accommodations

•Tightening regulation in many cities

•Professionalization of the industry

Long-Term Rental

•Persistent housing shortage

•Stable rental demand

•Rent caps in many cities

Conclusion: The Right Choice for Your Situation

The decision between short-term and long-term rental depends on your personal goals, available time, and risk tolerance.

Short-term rental offers:

•Higher returns (20–40% more)

•Flexibility

•Option for personal use

•But: more effort and risk

Long-term rental offers:

•Predictable income

•Little time commitment

•Legal simplicity

•But: lower returns

With professional management, you can combine the advantages of both models: the high returns of short-term rental with a low time commitment.

Let Arbio advise you on which model is optimal for your property. We analyze location, furnishings, and your goals, and develop the best strategy for maximum returns with minimal effort!

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