Over the past few years, there has been a lot of excitement about owning a
short-term rental as part of an investment portfolio. This marks a dramatic
change from the traditional long-term rental model. As more travelers utilize
vacation rentals instead of hotel chains for their trips, you may be
wondering if owning a short-term rental may be the right situation for your
needs.
Short-term rentals have caused a stir in many communities. Many full-time
homeowners do not like having these properties in their neighborhood.
Unruly vacationers often bring a party atmosphere to their quiet streets and
some cities have banned them completely. In other areas, they are severely
restricted in their use.
Another consideration is the amount of time a short-term rental will take to
manage. Unlike their long-term counterparts, short-term rentals often
require more repairs and maintenance as the tenants do not treat these
properties as their homes, as long-term tenants do. Short-term rentals also
require someone to be available 24/7 to address any needs of the guests.
Of course, you can hire a property management company to handle these
issues, but that will cut into profits and average 20%-30% of rents.
Short-term rentals can have a larger return on investment than long-term
rentals, but they come with more work. They also have significantly higher
vacancy rates, advertising costs, cleaning, and maintenance costs. On the
other hand, having a vacation property you can enjoy yourself may tip the
scale. There is no one-size-fits-all approach to real estate investing.
Consider what works for you and make the best choice for your goals.
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