Investors who buy property in Madrid to earn extra income are wondering whether short-term or long-term rentals are more profitable. The same question is asked on the Moving2Madrid portal, which gives a reasoned answer.
Long-term rentals are rentals for a period of one year or more, with the option to extend the contract. Short-term rentals are rentals for a few days or weeks. Short-term rentals have become popular in recent years thanks to online platforms like Airbnb.
Both short-term and long-term rentals have their advantages. Short-term rentals allow for a higher level of income than long-term rentals. They are also advantageous to the landlord in terms of tenant rights, as short-term rentals have far fewer rights. Short-term rentals also offer flexibility, allowing the owner to use the property themselves.
Long-term rentals also have their advantages. They provide a steady income, as they involve a stable rental relationship for a long period. In addition, long-term rentals have low maintenance costs, as the apartment is occupied by the same tenants, and there is no need to pay for cleaning. Long-term rentals also have lower depreciation of housing, as tenants perceive it as their home.
The answer to the question of what kind of rental is more profitable in Madrid depends on the price of the property you are buying. For properties under €250,000, long-term rentals are more profitable. These properties are usually small and have a plain layout, so they are not very popular on booking platforms, but are ideal for students or single people. For properties between €300,000 and €700,000, properties can be in demand on Airbnb under certain conditions, such as a central location, two bedrooms, a small kitchen, air conditioning and a separate entrance. Properties between €400,000 and €500,000 are ideal for short-term rentals and can bring in up to 6% per year. For properties between €700,000 and €1 million, long-term rentals are best, as luxury properties are not in demand among tourists on Airbnb and it is difficult to secure a sufficient number of tenants.
The conclusions are that with a full property value of 300 to 700 thousand euros, the best option is short-term rent, despite the maintenance costs. This is justified by the overall profit that the owner can make.
