The rise of short-term rentals grew dramatically for the past few years. As a Wake Forest rental property owner, the idea may have crossed your mind to buy or convert one of your properties to a short-term rental. There are property owners who swear by short-term rentals, but other investors find the hassles that come with it are not worth their time. Before anything else, find out the pros and cons of owning a short-term rental property.
The main reason for going into the short-term rental property business is its potential for generating higher revenue. In terms of dollars per day, short term rentals are higher than long term rental. If the turnover of tenants is fast, your property can earn more than a long-term lease. Short-term rentals let you increase prices at times of high demand, allowing you to maximize your profits.
One more advantage that a short-term rental brings is flexibility. You have the freedom to have your property rented for a week or a month at a time. If your rental property is in a nice vacation spot, vacancies may mean no cash flow but it opens up for a personal getaway. Then there is the convenience of rental platforms like Airbnb and by using this service, you can say goodbye to leases if you list your property there.No need to worry should you decide to switch your property back to a long-term lease as you can easily remove your listing from these sites anytime.
On the other side of the fence, there are a few drawbacks to owning a short-term rental. Although it is true that it generates more cash, it is also less stable. Most short-term rentals experience seasonal fluctuation which means your property could be empty and generating no income for you. Not ideal at all. While marketing and other smart plans can help generate revenue, always remember that dire situations can undermine our best efforts. Short-term rentals are very sensitive to economic conditions, and economic downturns often result in less demand. For example, you may have noticed that the short-term rental market has suffered a lot this year due to stay-at-home orders and travel restrictions caused by the pandemic.
Another disadvantage that you should remember about the short-term rental is the higher costs that it entails. Preparing a short-term rental could mean stocking up on essentials. Also, for your property to be competitive, you would need to buy attractive furnishings and décor. You also need to make sure that your tenants always have things like linens, toilet paper, pots and pans, and more. These items will need to be re-stocked between tenants so your expenses will pile up over time.
For a short-term rental, there will be more cleaning and maintenance. When you’re doing the preparation for the next tenant by yourself, this would take up a lot of your time. You could hire someone but this will also prove to be expensive especially if your property is in high demand. It is imperative that your place must be cleaned between tenants and maintenance and repairs are done at the right time. If not, then you could suffer from bad online reviews which would hurt your business because there would be fewer bookings in the future.
Finally, it’s best to be guided accordingly so it’s important to check state and local regulations on short-term rentals. There are strict regulations in some cities and homeowners’ associations when it comes to short-term rentals. Before you decide to buy or convert your property into a short-term rental, do your research first as restrictions vary from city to city.
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