It’s no secret that the short-term rental business is red hot right now. Travel demand is higher than ever, yet many people are looking for different experiences than we were a few short years ago.
With more flexibility to work from home, guests can stay a little longer and explore more. Today’s travelers are excited about private getaways in less populated areas that feel like home away from home.
The travel industry has shifted slightly thanks to popular travel sites like Airbnb and VRBO. As a result, big corporations and fancy resorts are no longer the most prominent players in town.
The short answer is yes—vacation rentals are very profitable. Of course, there are many variables, such as location, property maintenance, and upfront costs, but overall, short-term leases provide a better return than long-term leases.
When comparing similar properties in the exact location, a short-term rental typically produces at least two to three times more rental income than a traditional yearly rental. In addition, vacation rentals offer more opportunities to update the rental price, which is an excellent hedge against inflation.
A short-term rental refers to leasing property or temporary housing for 30 days or less. Most short-term housing is rented weekly or monthly, but it also offers nightly rentals. It’s an alternative to a hotel, sometimes called a vacation rental. These units can also be used as mid-term rentals, which are short stays over 30 days but usually less than 6 months.
Short-term rentals differ entirely from a resort, as the property could be anything from a multi-family home, condo, apartment, townhome, or cabin. They’re wholly furnished and geared towards providing the same comforts to renters as staying with a friend or family member.
Many people who own a second home or a vacation property can create additional income by renting it out when they’re not using it. It started as a side gig for many landlords, but many investors have found the money-making intriguing as it gained popularity.
Short-term rentals allow you to take better care of your investment. You can get in there with more short stays, have the property cleaned more often, and catch any maintenance issues before they go too long. In addition, most vacation rentals charge a cleaning fee, so you don’t even have to pay for some of the upkeep yourself.
HIGHER EARNINGS
A well-marketed short-term rental in a desirable area will consistently outperform a long-term rental in earnings. Of course, it’s essential to do your due diligence on rental demand in the area, but there is no doubt that vacation rentals bring in more income than your typical yearly leases.
BETTER MAINTENANCE
A well-marketed short-term rental in a desirable area will consistently outperform a long-term rental in earnings. Of course, it’s essential to do your due diligence on rental demand in the area, but there is no doubt that vacation rentals bring in more income than your typical yearly leases.
FLEXIBILITY
You have complete control over the calendar and when you want to offer your rental. If you decide to renovate the kitchen, you can block off the calendar for a month and finish the project when convenient.
You also have the freedom to adjust the prices as you see fit. For example, you can charge more per night after your kitchen renovation. If potential guests are looking for an entire month’s stay, you can adjust your pricing so it’s more competitive. Most people enjoy the flexibility of dealing with a homeowner versus a hotel manager.
APPRECIATION
Beyond the monthly cash flow, your property will appreciate yearly. The longer you hold on to your rental property, the more it will be worth when you decide to sell. Of course, the rate is never guaranteed, but real estate does not decrease in value.
ACCESSIBILITY
Unlike other investments, you can take out a loan to purchase the property and use borrowed money to bring in more income. This is especially helpful for beginning investors who don’t have access to a lot of cash. You can build wealth much faster when you know how to leverage debt profitably.
TAX BENEFITS
Short-term rentals have a slew of tax advantages, making them very appealing. For one, the interest paid on the loan we discussed is a tax write-off, not to mention all the other deductions for maintenance, management, marketing, insurance, etc. You can also deduct the property's depreciation.
Choosing the right location for your short-term rental is extremely important. Unfortunately, the same criteria you would use for a long-term rental don’t always work when looking for a property.
Destinations outside metropolitan areas are becoming more popular. In addition, properties close to outdoor adventures like mountains, deserts, and national parks do well.
The following elements are crucial to choosing a profitable investment:
Once you have a location and rental property picked out, you can make
a list of things to help your vacation rental stand out against the competition—research other listings to get a feel for the market.
When you build your listing, use professional photographs that showcase the highlights of your property. Then, a description will draw in your ideal guest and answer inquiries promptly.
Modern and clean furnishings will allow you to ask for a premium rate. The rental should be well-stocked with essential items a traveler would want while away from home. You can go the extra mile to ask for food or hygiene preferences before they arrive.
Guests are looking for an unforgettable experience. They will also enjoy extra amenities like bicycles, kayaks, or beach chairs—don’t forget to include them in your listing.
Always ask for reviews; they’re the lifeline of your business.
On top of the abovementioned characteristics, you’ll need to research the local laws and regulations for short-term rentals in that particular city and county. Some places will charge additional taxes to deter vacation rentals or even ban them.
Sometimes, investing in a property just 10 minutes away can make a big difference to your bottom line. Highly traveled areas are more likely to charge extra fees, but you must always check with each municipality before committing to a property.
Short-term rentals are vacation rentals that guests stay in for a couple of weeks to a month but no more than a year. They’re an alternative to a typical hotel that offers a home-away-from-home vibe that people have come to appreciate.
The short-term rental market has seen a lot of growth with investors because of their ability to provide a better return than traditional long-term rentals. In addition, anyone can manage vacation rentals on their own using popular online platforms, or you can hire a management company to oversee the logistics while you earn a passive income.
Choosing the right location is critical when investing in short-term rentals. Therefore, it’s imperative to research the rental climate before committing to a property to avoid losses.
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