Short term rentals refer to AirBnB, VRBO, Home Away, and similar companies that make it possible for property owners to offer accommodations to travelers. As might be expected, the larger hotel chains aren’t happy about the rise of these platforms, which is why cities that rely on tourist trade have strict regulations that make it difficult to operate short-term rentals. However, if you’re in an area in which it’s a little easier to launch a short-term rental business, there are quite a few benefits to be enjoyed.
Much Higher Returns
Since each tenant is renting for a shorter period of time, you can double or almost quadruple what you make in rent for each unit. Of course, a revolving door of tenants also means you’ll spend a little more in upkeep and other expenses, but your return on investment will more than make up for those added costs.
Available for Personal Use
Since your tenants are coming and going on a regular basis, you’ll have access to the empty units whenever the need arises. Whether you suffer a financial hardship and need a place to stay, or you have relatives coming to town for the weekend, you can always make use of empty units.
Reduce the Risk of Loss
When you manage a long-term rental, you run the risk of tenants falling behind in their rent, or damaging the property. You don’t face a high risk of these things occurring with a short-term rental, because your tenants pay in advance and only stay for a short period of time. As long as you can keep your short-term rentals booked on a consistent basis and maintain insurance that covers damages, a short-term rental can be a virtually risk-free investment.
When you are ready to invest in real estate for short-term rentals, there are three factors to consider. First, consider the location and determine if it’s a desirable vacation area. The market value of similar properties should also be examined to determine how much you can ask for in rent from your tenants. Will the property sell for a good price, if you choose to sell in the future? Finally, learn as much as you can about legislation that may affect your ability to operate a short-term rental. If all of these factors seem favorable, you may be ready to begin investing.
About The Author
Jack Nourafshan is a distinguished real estate development professional and entrepreneur in Los Angeles, California. He is the President of Reliable Properties, a real estate acquisition, development and management company in the Los Angeles area. Jack has over 30 years of professional experience that has made him known as a leader in the industry. Jack Nourafshan started a blog on entrepreneurship to share his insight and experiences for aspiring entrepreneurs.