The Pros & Cons of Short-Term Rentals: What You Need to Know
Short-term rentals have become increasingly popular in recent years. The sharing economy has enabled individuals to monetize their unused properties and belongings through peer-to-peer services like Airbnb and HomeAway. These platforms have made it possible for people to rent out their homes, apartments, cottages, cabins, yachts and virtually any other type of property for a limited period of time. Short term rentals are an excellent alternative to hotels or vacation rentals if you’re only going to be staying somewhere for a few days or weeks. They are also more affordable than buying property outright, which is especially advantageous if you aren’t sure where you want to settle permanently just yet. However, there are some downsides that need to be considered before deciding whether or not short term rentals are right for you.
How to choose the best place to buy properties for short-term rentals
First you’ll want to think about where you want to locate your short-term rental units. If you want to make the most money, you’ll want to look for areas with high demand and low supply for rentals. The best places to buy properties for short-term rentals include: – Places with tourist seasons – If you’re looking to make money from out-of-towners, you’ll want to locate your property in a popular vacation destination—ideally one that has a seasonal tourist industry. – Places with lots of conferences – If you’re looking to make money from business travelers, you’ll want to locate your property near a major convention center. – Places where people are moving – You can make a killing off short-term rentals in neighborhoods where people are moving away. You don’t want to buy in a place with too much supply, however. As an investor, you want to buy where there’s a high demand for rentals, but a low supply of them.
Income potential for short-term rentals.
Short term rentals can make you a lot of money if you find the right properties to buy. Some short term rentals can make you upwards of $100,000 a year in profit alone. That said, short term rentals are not a get-rich-quick scheme. You’ll have to be strategic about which properties you buy, and you’ll need a fair amount of startup capital to make it all happen. You’ll also need to be diligent about managing your properties, as well as keeping up with relevant laws and regulations that pertain to your particular area.
Short Term Rentals Pros
– You can generate passive income from short term rentals. It’s possible to make a full time income from short term rentals, but it takes time and effort to build up a portfolio of units. – You can use short term rentals to diversify your income. If you buy several short term rental units, you won’t be putting all of your eggs in one basket.
– You can earn a positive cash flow from short term rentals. You can put as little as $10,000 down on some short term rental locations and make a profit. – You can make money renting out your property while you’re away on vacation. – You can make money renting out your property while you’re at work – You can use short term rentals to help fund your retirement.
– You can use short term rentals to fund your children’s education.
– You have full control over your rates, amenities and payment terms.
Short Term Rentals Cons
– You’ll be responsible for managing your short term rental units. If something breaks, you’ll need to pay for repairs. If somebody damages something, you’ll need to pay for repairs. If guests are noisy or disrespectful, you’ll need to enforce your boundaries. If guests damage something, you’ll need to pay for repairs. – You’ll need to pay extra taxes on your short term rental income. – You’ll need to be mindful of zoning laws, noise ordinances and vacation rental ordinances in your area.
– You’ll need to manage your short term rental guests and keep meticulous records.
– You’ll need to be prepared to deal with unruly guests, fire hazards and insurance issues.
– You’ll need to be prepared for possible inspection by local authorities.
Final Words: Is a Short-Term Rental Right for You?
If you’re looking for a way to make money from a spare room or empty apartment, or you’re hoping to fund an early retirement, then short term rentals might be the right choice for you. If you’re willing to put in the work, and you’re prepared to deal with the occasional headache, then short-term rentals can be a great way to make money. If you’re willing to commit to the long-haul, however, and you’re willing to buy real estate and make repairs as needed, then short term rentals can set you up for success in the long-term, as well.