The rise of short-term rentals grew dramatically for the past few years. As a Southwest Waterfront rental property owner, the idea may have crossed your mind to buy or convert one of your properties to a short-term rental. One size does not fit all. Some short-term rentals are favorable to some but not to other investors. Before anything else, find out the pros and cons of owning a short-term rental property.
The main reason for going into the short-term rental property business is its potential for generating higher revenue. On a daily average, short term rentals gain more than long term rental. Your property can earn more than a long-term lease, just as long as tenants are lining up. Short-term rentals let you increase prices at times of high demand, allowing you to maximize your profits.
Owning a short-term rental equals flexibility and that is a great advantage. It’s entirely up to you whether you want your property rented a week at a time or for several months. If your rental property is in a nice vacation spot, vacancies may mean no cash flow but it opens up for a personal getaway. Set up your property on rental platforms like Airbnb so you no longer have to deal with leases. Should you decide to switch your property back to a long-term lease, just easily remove your listing from this site at any time.
But of course, there are a few drawbacks to owning a short-term rental. It may bring in cash fast, but it may not be that stable. Most short-term rentals experience seasonal fluctuation and this means no income from your property for a certain time. While good marketing could mitigate this, be prepared that sometimes your best efforts may not be enough. Short-term rentals are very sensitive to economic conditions, and economic downturns often result in less demand. For example, you may have noticed that the short-term rental market has suffered a lot this year due to stay-at-home orders and travel restrictions caused by the pandemic.
It is also important to note that short-term rentals incur higher costs. Preparing a short-term rental could mean stocking up on essentials. It goes without saying that your property needs to be competitive so you would further invest in expensive furnishings and décor. Your tenants should always have things like linens, toilet paper, pots and pans, and more. These items will need to be re-stocked between tenants, so this means more expense on your part.
For a short-term rental, there will be more cleaning and maintenance required. When you’re doing the preparation for the next tenant by yourself, this would take up a lot of your time. You may choose to hire someone but this could add to your expenses especially if your property is in high demand. It cannot be overemphasized how important it is to have the place cleaned in between tenants and that maintenance and repairs are done on time. Because if you don’t, you could get bad online reviews. This is a thing we desperately want to avoid as it results in fewer bookings in the future.
Finally, it is a good idea to inquire about state and local regulations on short-term rentals. There are strict regulations in some cities and homeowners’ associations when it comes to short-term rentals. Before you decide to buy or convert your property into a short-term rental, do your research first as restrictions vary from city to city.
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