Short-term or long-term rental: how to decide

“Does a short-term rental earn more than a long-term one?” is the wrong question — or rather, it’s a question that can’t be answered as it stands. The two options don’t differ only in how much they earn. They differ in how much you risk, how much you work and how free you are to change your mind.

And there aren’t two options: there are three. In between sits the mid-term rental, which many owners don’t know is an option.

The three options, in brief

Short-term rental. Stays of a few days, prices that change with the season and with events. Higher gross income, higher costs, constant work. You decide the calendar, and the home stays available to you whenever you want it.

Mid-term rental. Contracts from one to twelve months, for people who work, study or are moving to the city. Income in between, little turnover, no day-to-day guest management. It’s the option that keeps homes occupied in Milan and Turin in the months when the tourists aren’t there.

Long-term rental. Contracts lasting several years, a fixed rent every month, costs kept to a minimum. The income is the lowest of the three and the most predictable. In exchange, the home isn’t available to you for years.

What really changes, point by point

Income. Gross, a short let earns more, almost always. Net, the gap narrows, because with a short let you pay for the bills, the linen, more frequent maintenance and the management. The honest comparison is made on annual net income: how to work it out is in how much a flat earns as a short-term rental.

Variability. With a long let you know in January what the home will have earned by December. With a short let one month can be worth twice the one before, and a bad year does happen. If you have a mortgage on the home and need each month’s repayment covered, this weighs more than the return.

Risk — but not the same risk. With a short let, the risk is that the home stays empty: annoying, and you see it straight away. With a long let, the risk is a tenant who stops paying: rare, but when it happens it drags on, it costs, and you don’t sort it out in a month. They are two risks of a different nature, and anyone who compares only the returns ignores both.

Work. A short let is a real job: listings, prices, messages, arrivals, cleaning, formalities. A mid-term let has little turnover and some paperwork. A long let, once it’s under way, asks little of you. If you’re doing it on your own, this is the line that matters most.

Freedom. With a short let you block the dates you want and the home is yours when you need it. With a mid-term let you get it back at the end of the contract. With a long let, on a 4+4 lease (four years, renewed automatically for four more), we’re talking years.

Wear on the home. Fifty groups of guests a year wear a home down more than a family living in it does. With a short let, maintenance has to go in the budget, and it has to be done before it shows.

When a short-term rental makes sense

• The home is in the centre, or a few minutes’ walk from a station or a metro stop.
• The city has real demand: tourism, trade fairs, hospitals, universities, events.
• You want to be able to use the home yourself, even just a few weeks a year.
• You accept that the income varies from month to month.
• The home is already in good condition, or you’re willing to put it right before it goes online.

It doesn’t make sense if the home is far from everything, if the building has contractual rules that forbid it, or if you need a fixed amount every month.

When a mid-term rental makes sense

• The home is near a university, a hospital or an office district.
• The city has dead seasons when short lets don’t fill the calendar.
• You want less turnover than a short let but don’t want to commit for years.
• The home is big enough to house someone for a few months, not just for a weekend.

It’s the most underrated option. In Turin and Milan we often suggest alternating: short lets in the months with events, mid-term lets in the quiet months, in the same flat. How the contract works is explained on the mid-term rentals page.

When a long-term rental makes sense

• You need a fixed amount every month, for example to cover a repayment.
• You don’t want to think about it: not the guests, not the cleaning, not the formalities.
• The home isn’t in a location that short lets reward.
• You don’t expect to need it back for a few years.

There’s also a variant, the canone concordato, an agreed-rent contract: a rent below open-market levels, set according to the local agreements in your council area, which in exchange gets more favourable tax treatment. Whether it suits your case is a question for your accountant; details on the long-term rentals page.

Two different questions: how long the rental lasts, and who manages it

So far we’ve talked about how long the rental lasts. There’s a second question, independent of the first: who looks after the home, and on what terms. There are two options, and they apply to all three durations.

• Property management. The home stays in your name and we manage it for a commission on bookings: if the home earns nothing, you pay nothing. It’s the model we use for most of the homes we look after, and it means our earnings and yours rise and fall together.
• Rent-to-rent, the Italian sublocazione, which you may also see called subletting. Here we become your tenant: you receive an agreed fixed rent, and the risk of empty months stays with us. You get a predictable amount and nothing to manage; in exchange you give up the peaks of the good weeks.

Rent-to-rent isn’t an arrangement you ask for: we offer it, and only when the numbers for that home can support a fixed rent for the whole length of the contract. How it works is explained in our guide to rent-to-rent; what the percentage covers is in what management costs. In both cases, how and when payments are made is agreed with you and written into the contract.

The two questions don’t depend on each other: with either model the home can be let short, mid or long-term, and often alternates between them over the year.

What changes for tax

Short, mid and long-term lets aren’t declared in the same way, and how many homes you let, and how you use them, matters too. The official picture is on the website of the Italian Revenue Agency, the Agenzia delle Entrate (in Italian), and the rules on short lets are gathered in this official guide (in Italian).

For tax matters, your accountant is the reference; if you have a question, ask us. Before you choose, there are three questions to take to them:

• which regime suits the income from this home, as a short, mid or long-term let;
• what changes if you let more than one home;
• whether a canone concordato makes sense in your council area, and what it involves.

What about the building?

Before you decide on short lets, it’s worth reading the building’s regulations. Regulations of the contractual kind, accepted by every owner in their purchase deeds, can forbid tourist lets; a majority resolution of the owners’ meeting, as a general rule, can’t impose the same ban, but it can regulate noise, hours and the use of shared spaces. It’s a ten-minute check that saves you a problem lasting years.

Can you change your mind?

Yes, and it’s the answer that reassures people most.

You can move from short to long whenever you like: you simply stop taking new bookings. You can move from long to short when the contract expires, giving the notice it provides for. And you can alternate within the same year: it’s what we do in Turin with homes that work well in the months with events, and in Savona, where summer and winter are two different markets.

The choice isn’t forever. It’s for the season ahead of you.

How we decide it together

At the visit we look at the home, the area and the real prices in the neighbourhood, and we tell you which of the three options makes sense, with the numbers for each. If we think the answer is a long-term rental, we tell you so, even though for us it’s the least profitable option.

The estimate is free and doesn’t commit you. The cities we work in are these, and what it costs to have your home managed is in how much short-term rental management costs.