The real estate sector in Andorra is experiencing unprecedented growth. More and more investors are interested in the opportunities the Principality offers, both in traditional rental and vacation rental. But which of the two options is truly the most profitable and convenient for investment? In this article, we will explore the differences between short-term rental or "Short term rental" and long-term or traditional rental, breaking down key factors such as profitability, management, maintenance, and current market conditions of Andorra's "Real Estate." Although both models have their merits, short-term rental offers certain advantages that make it more attractive, especially if managed through a specialized company like AndBnB.
Profitability in the Current Rental Market in Andorra
Due to the current rental market situation in Andorra, where rents are sky-high, there is no longer a significant difference in profitability between short-term (vacation) and long-term (traditional) rentals. Previously, vacation rentals outperformed traditional rentals by a minimum of 50%, but now the figures are very similar, especially in parishes like Andorra la Vella, where there is a significant housing shortage.
Long-Term Commitment and Flexibility
One of the biggest issues with long-term rentals is the commitment to a 5-year or longer lease. This means that you cannot use the house as needed. On the other hand, in vacation rentals, you have the flexibility to use your property whenever you wish. Companies like AndBnB allow you to use your apartment without limitations.
Passive Investment vs. Active Management
Although profitability is similar, long-term rentals require you to deal with day-to-day issues, such as a broken refrigerator. If you hire someone to handle these issues, your profitability will decrease. With a comprehensive management package, your investment is 100% passive.
Maintenance and Property Condition
Contrary to popular belief, short-term rentals are often in better condition as they are regularly checked, cleaned 1–3 times a week, and frequently inspected. Any damage is covered by the guest's deposit or Airbnb's insurance. In long-term rentals, you usually need to paint and renovate after each tenant.
Price Adjustment and Growing Market
With rising inflation, vacation rentals allow you to adjust prices daily, enabling you to increase prices at the same rate as the market grows. In long-term rentals, there are limitations on how much you can increase the rent each year.
Conclusion
In summary, if you're considering investing in Andorra's real estate market, don't overlook the multiple advantages of short-term rental. With proper management, this option can not only match the profitability of traditional rental but also offers greater flexibility, less risk, and more sustainable long-term returns.