Investing in rental properties is a widely known path to wealth. What about investing in short term rentals? In recent years, short term rentals have become a popular avenue for investors and travelers alike. Due to the rising popularity of AirBnb and VRBO, large hotel chains are not the only option for people traveling for business or pleasure. Short term rentals can provide a home-away-from-home experience for travelers who are looking for the type of private accommodation a hotel cannot offer. More and more investors are turning to short term rentals to create their cash flow! Keep reading for an overview of short term rental investments so you can consider why it might be a great option for you!
What is a Short Term Rental?
A short term rental is a fully furnished rental property that rents out at a nightly, weekly, or monthly rate instead of a traditional 12 month lease. A short term rental can be anything from an apartment, house, townhome, cabin, or any other type of overnight accommodation. Some listings are even for camping sites! Usually though, short term rentals are aimed at providing the same type of comfort a traveler would find staying with a friend, minus the company. Many short term rental hosts provide complimentary snacks, drinks, wifi, toiletries, and more.
How it Works
One of the best parts of short term rentals is the ease of communication provided through online platforms such as AirBnb and VRBO. These platforms facilitate such easy communication for booking and hosting, it’s no wonder the popularity of short term rentals has skyrocketed in recent years.
Hosts are able to view the profile of guests and their ratings from previous hosts, and guests are able to view detailed ratings on the properties and hosts as well. All financial transactions are completed through the platform. And the property availability is easily displayed for guests to select their preferred dates.
Hosts have the ability to require a minimum night stay and cleaning fees. Other instructions such as checking in and out are made available through the online platform as well. Guests and hosts might never actually “talk,” but guests are given everything they need for their stay along with the preferred method of contact chosen by the host.
Profitability of Short Term Rentals
For 2023, the occupancy rate of short term rentals is expected to hit about 57.4%. With a predicted average daily rate of $286.91 for 2023, the average expected annual income for a short term rental investment property is $60,110.51. This is much higher than the rough nation average for long term rental income at around $10,000 annually.
The numbers don’t lie! Don’t let the low occupancy percentage of short term rentals scare you off. Given the nature of short term rentals, their occupancy rate will always be lower than long term rentals. However, their proven success does not mean you can jump into purchasing a short term rental property with little forethought.
Pros and Cons of Short Term Rentals
Let’s take some time to list some pros and cons of short term rentals you should consider before embarking on your investment:
Pros
Cons
Maximize Your Short Term Rental Investment
Work with a real estate agent to research the market well! You’ll want to buy your property in an optimal location. Ideally, it would be great to buy a property at low cost in an area with high tourism rates. Remember, you can always enhance the property, but you’ll never be able to change the location! You can also choose to self-manage your short term rental without even hiring a cleaning service. This is especially beneficial if you have the flexibility and live near the property.
I love helping investors make strides in their real estate journey! With over ten years of experience in real estate, I know what it takes to succeed with positive cash flow. Check out my YouTube channel here where you can find more information geared towards helping you invest well in real estate.
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Investing in rental properties is a widely known path to wealth. What about investing in short term rentals? In recent years, short term rentals have become a popular avenue for investors and travelers alike. Due to the rising popularity of AirBnb and VRBO, large hotel chains are not the only option
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