What to Know About Buying Short-Term Rentals

Thanks to websites such as VRBO and Airbnb, you can now rent the property you own on a short-term basis instead of finding a long-term tenant. Finding someone who will rent a home for six to 12 months is sometimes difficult, especially during downturns in the market. You also need to worry about finding a reliable tenant who will leave the home in good condition. You should also be aware that you could possibly miss out on the short-term renters who need a place for a few weeks or less. As a homeowner considering short-term rentals, there are a few key things that you need to know.

Market Fluctuations

One of the best things about investing in short-term rentals is that you set the price, but this can also be one of the biggest downsides. Any fluctuations to the market can affect the price that you get, including:

•Stock market changes

•Closures to local attractions

•A local team's losing streak

•Neighborhood problems

When you buy a rental in a nice neighborhood, you expect to get a good price for it. If the neighborhood goes through some economic changes, you may have a difficult time finding renters. On the other hand, if the area becomes more popular, you can increase your price per night and still find renters.

Consider All Expenses

Even if you buy a property outright, you still need to pay other expenses every month or year. Too many people buy short-term rental properties without thinking about how much it will cost in the long run. You need to consider the property taxes in the city and any homeowners' association fees if the home is in an HOA neighborhood. Maintenance costs are something else to consider. Not only are you responsible for paying the insurance and utility bills, but you also need to cover anything that breaks and the cleaning that the home needs in between renters.

Cleaning Fees

A nice thing about short-term rentals is that you can add a cleaning fee to the cost. The tenant pays that fee when they check out, which gives you cash to pay for the cleaning supplies that you need. You may even make enough to have someone clean the property for you. Make sure that you set an affordable cleaning rate and not one that is too high. Some prospective tenants will look elsewhere if they think your price is too high.

Turn-Key vs. Reno Properties

Another thing to consider is whether you want to buy turn-key properties or those that need some renovation work. A turn-key property is in good condition and ready for tenants as soon as you buy it. This can save you money on renovations but may cost more upfront. Reno properties need more work that will cost extra but are often available at lower prices that require less of an investment. When you consider the right factors, you'll easily find short-term rentals in areas that you love that your future renters will also love.


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