Short-term rentals are getting very popular these days. As a Mill Creek rental property owner, you might have considered buying or converting one of your properties to a short-term rental. While short-term rentals work perfectly for some, other investors find the demands involved are too much. Before making any move, do your homework and examine the pros and cons of owning a short-term rental property.
The main advantage of short-term rental property is its potential for generating a higher rental income. You can earn more in terms of dollars per day for short term rentals compared to a long term rental. So your property can earn more than a long term lease, provided tenants are always available. Short-term rentals let you increase prices at times of high demand, allowing you to maximize your profits.
One more advantage of owning a short-term rental is the flexibility it offers. You can choose to have your property rented a week or a month at a time. If your rental property is in a nice vacation spot, vacancies mean a personal getaway for you! Take advantage of rental platforms like Airbnb by setting up your property there and say goodbye to leases. Switching your property back to a long-term lease is not an issue at all as you can easily remove your listing from these sites anytime.
On the other side of the coin, there are a few drawbacks to owning a short-term rental. Although it promises high rewards, these rewards may be less stable. Most short-term rentals experience seasonal fluctuation and this means no income from your property for a certain time. While good marketing could mitigate this, be prepared that sometimes your best efforts may not be enough. Short-term rentals are very volatile 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.
It is also important to note that short-term rentals incur higher costs. Stocking on essentials is part of a short-term rental. It goes without saying that your property needs to be competitive so you would further invest in expensive furnishings and décor. You should not forget to provide your tenants with things like linens, toilet paper, pots and pans, and more. These items will need to be re-stocked between tenants, so this means more expense on your part.
For a short-term rental, not only is cleaning and maintenance important, there is more of it. What’s more, if you’re preparing the place for the next tenant by yourself, it would require a lot of your time. You may choose to hire someone but this could add to your expenses especially if your property is in high demand. It is very important that you clean between tenants and maintenance and repairs are done on time. If you forget to do this, you could receive bad online reviews and it hurts financially to get fewer bookings as time goes by.
Finally, it is a good idea to inquire about state and local regulations on short-term rentals. There are cities that have strict regulations and homeowners’ associations that do not allow short-term rentals. Restrictions vary greatly between places so it is important to do your research before buying a property if you intend to use it for short-term use.
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