Many people sing the praises of short-term rentals. As an alternative to more traditional hotels, short-term rentals allow vacationers the opportunity to rent out more space in a location they desire.
Short-term rental properties can also be beneficial to owners. If you’re thinking about buying a short-term rental, however, there are a few things you’ll want to consider first.
Identify a location
Perhaps the most important consideration right off the bat is the location. The more popular the location is, the more likely you’ll be able to fill the rental with guests.
This is why it’s a good idea to pinpoint some popular tourist spots during your property search.
This is where you really want to get hyper-local.
For example, if you’re considering buying a property in a beach town, a short-term rental property right on the water is something renters want, so it may be a better investment than a less expensive property that’s not quite so convenient.
Consider year-round opportunities
Because many vacation destinations are seasonal, it’s sometimes more difficult to fill a rental property in the off-season.
When the typical tourist season ends, you’ll want to consider some other potential opportunities out there, like perhaps marketing your rental property to business travelers.
Understand local Laws & regulations
Before buying any short-term rental property, you also need to know about any local laws that could have an impact on the property.
Some major cities have recently made it harder for short-term rentals to operate, and you don’t want to be stuck with a property that you can’t legally rent out.
Be sure to look at state, county and city regulations, as well as any HOA regulations that specifically mention short-term rentals.
Know your budget
It’s also important to understand how much money you have to work with. A mortgage is just one consideration. You also need to figure in taxes and insurance.
The list doesn’t stop there. You’ll need to take care of
- Furnishing the rental
- Cleaning the property
- Monthly amenities and utility fees
- Maintenance costs
In other words, you need to have enough money to keep the property attractive and rentable.
Choose a realtor carefully
It helps, too, if you hire a local real estate agent that understands the local market.
Not all realtors are well-versed in short-term rentals, so make sure you’re working with an agent who has some experience in this type of real estate.
Consider a turn-key property
If you buy a property that’s currently being used as a short-term rental, you may already have renters ready to go.
Before you buy, ask the current owner to see rental and income records for the past few years.
This can help give you a better idea of what to charge renters, and how much you can expect to make each month off the property.