If you own an investment property, you may have wondered whether a traditional long-term lease or short-stay accommodation could deliver the better return.
At first glance, short stay can be tempting. Higher nightly rates can quickly add up, particularly during Adelaide's busy event periods. But higher revenue does not always mean higher profit.
The right choice depends on your property, its location, the costs involved and what you want from your investment.
The Case for Long-Term Rental
South Australia continues to have a competitive rental market, giving property owners the potential for consistent tenant demand and regular rental income.
The biggest advantage of a long-term rental is predictability. Once a tenant is in place, owners generally receive an agreed weekly rent for the duration of the tenancy, making income and expenses easier to plan.
There are also fewer day-to-day operating costs compared with short stays. Properties do not need to be cleaned and reset between guests, utilities are generally the tenant's responsibility and there is no need to continuously manage bookings.
For investors looking for consistency and less hands-on involvement, a long-term rental can offer a relatively straightforward approach.
Where Short Stay Can Stand Out
Short-stay accommodation works differently.
Rather than receiving a set weekly rent, owners can adjust nightly rates based on demand. This creates the potential to capitalise on weekends, school holidays and major events.
Adelaide's short-stay market recorded an average occupancy rate of 72% and an average daily rate of $211 in FY25. Demand was particularly strong during December and January, with another increase around April and Gather Round.
Location can make a significant difference too. Central properties, coastal locations and well-connected suburbs tend to perform well, making short stay particularly worth considering for properties that appeal to holiday, event or business travellers.
Higher Revenue Can Come With Higher Costs
Comparing $200 a night with $600 a week does not tell the whole story.
Short-stay properties generally need to be fully furnished and owners need to account for cleaning, linen, utilities, insurance, platform fees, maintenance and guest turnover.
Research comparing the two models also highlights higher wear and tear, furnishing replacement and greater management requirements as costs that can reduce the gap between gross and net income.
Occupancy can also change throughout the year. A strong month during Adelaide's event season may look very different from a quieter period.
That is why the more useful comparison is not simply nightly rate versus weekly rent. It is the potential net return across the entire year.
Think About How You Want to Use the Property
Financial return is important, but it is not the only consideration.
A long-term rental may suit owners who value consistent income and a more set-and-forget approach.
Short stay can offer greater flexibility. Owners may be able to block out dates for their own use and adjust pricing as demand changes. However, frequent bookings, guest communication and property turnovers also require more active management.
It is also important to check the requirements that apply to your property. South Australia's short-stay sector has been the subject of a parliamentary inquiry examining potential regulation, taxes or levies and other measures.
So, Which Could Make More Financial Sense?
There is no one-size-fits-all answer.
A well-located short-stay property with consistent bookings may generate stronger gross revenue than the same property on a long-term lease. For another property, the stability and lower operating costs of a long-term tenancy may deliver a better overall result.
The key is to compare like for like. Look at realistic annual income, occupancy, management, operating costs and your longer-term plans for the property before deciding.
Not sure which option suits your property? Our long-term and short-stay teams can help you understand your options, compare the potential and open the door to a strategy that works for you.
Disclaimer: Information in this blog is accurate at the time of publication. OC has relied upon information from external sources in compiling this publication and does not warrant its accuracy or completeness. Please verify details and consult your agent before making any decisions.
