The popularity of short-term rental services like Airbnb has had an impact on many people who love to travel and to real estate investors as well. But is it a worthy investment? It depends on your preferences when it comes to real estate investing.
For example, if you always prefer long-term rentals, you might not think of short-term rentals as a good investment. However, if you’re a risk-taker and you want to enjoy higher returns, you might want to give short-term rental properties a try.
What You Should Know About Short-Term Rental Properties
A usual rental property often involves a landlord who purchased the property and renting it to tenants for an extended period like for years. In other cases, the lease can be a monthly lease where tenants have to stay for a month and leave the property anytime with a notice of at least a month.
Commonly, long term rental properties involve leases, and tenants are responsible for some utilities and maintenance. They send the rent monthly and should stay in accordance with the lease. Compared to renting short term, with the right tenant, long-term rentals can be passive, most notably with excellent property management.
On the other hand, short-term rental properties are leased for less than 30 days. These can also be leased for a week, few days, or two weeks. Once you decide to invest in short-term rental properties, you can rent it out for more revenue daily compared to long-term rentals. It allows you to boost the property’s incomes more than what the rents could be on long-term leases. This is why real estate investors are becoming more interested in short-term rental properties. Here are the reasons why that it can be worth it investing in short-term rental properties:
As more people travel around the world, many prefer to rent short term while they’re on vacation instead of booking a hotel room to save some money. As in comparison to traditional hotels, short-term rental properties offer more affordable rates, especially if you’re traveling in groups.
A lot of people find comfort in a residence ambiance over commercial hotels. Short-term rentals also let travelers interact with other residents and neighborhoods while allowing them to discover more about their destination.
One of the primary reasons why you should invest in short-term rental properties is because they offer a more significant return on investment. When compared to long-term rentals, the profits you can enjoy from investing in short-term rentals are much higher. For instance, if your property can be rented for $100 daily and a tenant booked it for a month, you can get around $3000.
Although short-term rentals require more management, other fees, and a lot of work, the revenue is still higher compared to properties rented for the long term.
Another reason why you must invest in short-term rental properties is that most of them are already furnished. Such properties include the necessities of tenants such as furniture, plates, towels, utensils, decorations, electronics, TV, and some even have their own laundry room.
It’s also a good idea to invest in short-term rentals with a pool. With this kind of feature, many people would prefer your property than the other ones available in the market. If you want to make the most out of your short-term rental properties, you can also decide to improve the furnishing and renovate some parts for a better aesthetic.
One of the best things about short-term rental properties is that there will always be something that will suit your budget and preferences. If you can’t buy a mansion, it’s not a problem. Most short-term rentals come in all sizes, price points, and shapes. From mountain chalets to studio apartments, there will always be some properties that will suit with your investment. Remember to consider the location and settle with properties near to famous destinations or where travelers usually book for their accommodation.
Even if you own some real estate properties, a short-term rental property involves a different market compared to some real estate properties. If you want to consider short-term rentals as your next investment, you can never go wrong with it.
With asset diversification, you can insulate your investment portfolio from the market volatility. In addition to that, the revenues from a short-term rental can cover the mortgage of the property, which can be a good way for first-time investors to get into the market.
There are numerous benefits to investing in short-term rental properties once managed effectively. However, it’s also essential to note that there are also some risks in such properties. But, if you have chosen the right properties wisely, you can be assured that you’ll get better results and return on investment in the long run. Just make sure to have your properties maintained regularly.