During the past few years, short-term rental options are getting popular. As a Prince Frederick rental property owner, you are probably weighing the option of buying or converting 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 you make a decision, weigh the pros and cons of owning a short-term rental property.
The ability of a short-term rental property to make a bigger profit margin is the main reason why property owners choose this method. On a daily average, short term rentals gain more than long term rental. In an ideal situation, when the guest leaves and somebody moves in right after, your property can earn more, than a long-term lease. 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. You have the option to rent your property for a week or for a month at a time. If your rental property is in a nice vacation spot, vacancies may not entirely be a bad thing as you can use it for your personal getaway. Set up your property on rental platforms like Airbnb so you no longer have to deal with leases. You can easily convert your property back to long-term rental by just removing your listing from these platforms.
But it’s not perfect since 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, so your property may not be earning for a time and that’s something you may not like. While marketing and bright ideas can prevent this, sometimes, you just can’t win. 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 important to consider another disadvantage for short-term rental and that is higher costs. Furnishing and buying essentials is part of the preparation of a short-term rental. For your property to be competitive you would need to have nice furnishings and décor. Your tenants should be provided with things like linens, toilet paper, pots and pans, and more. These items will need to be re-stocked between tenants, which translates to a higher expense over a period of time.
For a short-term rental, cleaning and maintenance is a very big factor. If you’re doing this yourself and getting the place ready for the next tenant, this can take a lot of your time. Hiring someone could be a solution but you should also check your bottom line as expenses add up especially when your property is in high demand. As a cardinal rule, the place should be cleaned between tenants, and necessary maintenance and repairs are done on time. Miss this part and you could get bad online reviews. It’s the last thing you want to experience in this business as it translates to fewer bookings in the future.
Finally, it’s better to be informed by checking state and local regulations on short-term rentals. Cities and homeowners’ associations have strict regulations for short-term rentals. Since restrictions are not the same from city to city or even between neighborhood to neighborhood, it is best to do your research first before deciding to convert your property into a short-term rental.
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