In the field of the Paraguayan real estate market, it is essential to understand the particularities that distinguish temporary rentals from traditional ones. Both modalities have their own advantages and challenges, and the choice between one or the other may depend on various factors.
Unlike what happens in other countries, in Paraguay both temporary and traditional rentals are governed by the same law, specifically Law No. 1,295 on Rental, Leasing or Financial and Commercial Leasing, and share a VAT rate of 5 %.
Traditional rentals are distinguished by long-term contracts, providing stability in monthly income for those investors looking for a constant and predictable flow in the long term. However, this stability may be affected if the owner decides to sell the property or needs to live in it, since the contract must be terminated by the tenant. Another disadvantage is that income is fixed and cannot be adjusted according to demand or season.
On the other hand, temporary rental offers greater flexibility, with short-term contracts ranging from a few days to six months. This allows the owner to dispose of the property for other purposes or sell it as desired. However, it does involve the need to ensure that the property is fully equipped and furnished, which may incur additional costs.
As for possible disadvantages, short-term rentals can face problems such as damage or theft of equipment, conflicts with the building consortium, less legal support for the costs of an eviction, an increasingly competitive market, lack of guarantees against major damages , and impossibility of collecting debts/damages from foreigners. Additionally, the competitive market and lack of guarantees against major damages may present additional concerns. Temporary rentals also require more constant attention to ensure tenant satisfaction and maintain a good reputation on platforms such as Airbnb or Booking.
Despite these considerations, short-term rental can be more profitable than traditional rental. According to estimates, the average net monthly income for a two-room apartment for temporary rental in Asunción can amount to 840 USD, without deducting expenses and with an occupancy rate of 70%, while in the case of a traditional rental it would be 650 USD.
For owners, it is important to take into account the specific needs of each type of rental. While in traditional rentals tenants usually bring their own furniture and appliances, in the case of temporary rentals it is expected to find the property fully equipped and furnished, which implies an investment of between USD 4,000 to USD 6,000 if it is a studio apartment or 2 rooms. , respectively.
Additionally, short-term rental can be an attractive option for students and business travelers. With the growth of remote work, there is a growing demand from people looking for medium-term stays in comfortable, well-located places. This represents an opportunity for homeowners who can adapt their properties to meet this specific demand.
On the other hand, traditional renting is ideal for families or young people who live in cities but do not have a large amount of money to buy their own home. In a context of high interest rates in Paraguay, acquiring property can be difficult for many. These renters are looking for homes close to their workplaces and their children's schools. In Asunción, there has been an increase in demand for properties from people who lived in nearby cities but worked in the capital, due to increasing traffic in the region.
The dynamics of the Paraguayan real estate market reflect these changing trends, where both temporary and traditional rentals find their place depending on the needs and preferences of tenants. While the first adapts to a more mobile and temporary profile, the second is aimed at those seeking stability and roots in a place. Understanding these dynamics is essential for investors and owners who want to maximize the performance of their properties in an increasingly diverse and demanding market.