With the popularity of Airbnb, Vrbo, Hometogo and other similar platforms, short-term rental properties have become a popular option for real estate investors and homeowners looking for supplemental income. If you are considering entering the short-term rental market, you will first need to understand some basics about the industry and operations.
So, what is a short-term rental?
A short-term vacation rental (STR) is most often defined as a property that you own or control and then rent out for short periods of time (periods of less than 31 consecutive days).
These rentals are private properties that hosts can rent in their furnished house, room, apartment or condominium. Their main advantage is privacy, access to local culture and unique accommodations.
Location and demand
Location is the most important factor to consider. Homes with immediate access to a nearby attraction (the city center, the beach, the ski slopes, a theme park) are the best choice for an investment property. However, properties near hospitals, medical centers, colleges and camps are also good opportunities.
In addition to having the right location, the property itself needs to appeal to short-term rental seekers. That may mean investing some time and money in refurbishing, renovating and furnishing a property.
What space would make a good rental?
If you have the location, you can find the space. Aside from a stand-alone property (home, apartment, condo, etc.) alternative rental properties can be set up with a bit of creativity.
Here are some ideas:
Clear out a garage and convert into living space
Snowbird? Consider renting out your home(or part of it) for the time you’re gone
Have a big piece of property? Hook up an airstream or RV
Convert a shed into tiny living space
Basements work too as they often have a separate entry
Hard to sell properties – why not rent until you find a buyer?
As long as they are thoughtfully furnished, these non-traditional rentals can do very well. You’ll find examples of these types of rentals on Airbnb and they are booked up! Of course, you should check with your local building department before investing in any of these options.
How to get started?
First, you will need to find out if your town allows the use of short-term rentals and what is involved in precuring a license. Always check first because these laws vary from state-to-state, city-to-city and county-to-county.
Many states also require having your home inspected before granting a short-term rental business license. The inspector must indicate that property adheres to operational standards, such as an appropriate number of fire extinguisher and smoke detector requirements, as well as emergency escape and rescue availability.
Make the place look Instagram worthy. Guests will book a property using online tools such as Airbnb, Booking.com, and Vrbo so it’s imperative that they look amazing in photos. Gone are the days where hosts could get away with using older furnishings and hodgepodge decorating. Guests have a higher expectation for their stay and the furnishings must be attractive as well as durable.
Offer amenities. WiFi, washer and drier, games, hot tub, Smart TV, welcome pets, etc. People want to get the most out of their rental stay. The more amenities you offer to your guests, the more likely they will return and give a great review.
Make your listing stand out. Invest in professional photography as it’s the first thing your guests will see and a major factor whether they will want to stay in your property. Write short, accurate, descriptions to highlight attributes that make your place worthy of their stay.
Consider hiring a professional short-term rental designer! It’s a given that they will make the place look outstanding but, they are experts in understanding what it takes to outfit a space to rent. They have extensive knowledge about furniture, space planning and can source the items you will need saving you time and money.
Starting a vacation rental business involves acquiring, maintaining, marketing and renting out these properties to travelers. This also means having to maintain the aesthetics, check-in/out process, cleaning, being a host, guest satisfaction and the accounting. So be prepared to handle these on your own or hire a property management firm. Rental properties can lead to a steady cash flow, assuming you make an educated decision and perform due diligence before deciding to purchase
Bottom line? Do your research!
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