3 Good Reasons to buy a Short Term Rental Property
In the current economy, many are looking for a way to earn a side income with the least amount of ‘side work’. Who can actually work a solid 40 hours plus per week and find the time and energy for a second job? Not many. Real estate investment in a rental property is one way to maximize your income with less than a ‘second job time investment. Here are three good reasons to consider purchasing a property for short term rental.
Increase Your Worth
Owning a home immediately increases your net worth, even though you haven’t paid for it yet. *The Median Net Worth of a homeowner is $ 174,500.00, as opposed to the non-homeowner – $ 5,100.00. Each month, instead of burning your cash on the rent payment, you are socking away an investment, aka a mortgage payment.
A Short Term Rental Business Can Bring in Good Income
Purchasing a home expressly for the purpose of renting is common. What may be uncommon is the decison towards Short Term Rental vs. Long Term Rental. Renting by night, weekend, week, or longer creates more income. The length of stay dictates the charge (think hotels). A home in a prime location, say near a national sporting venue or a nationally known theme park, can command upwards of $2,000.00 on a given weekend. Compare this to a $3,000.00 per month mortgage for the same home with a long term renter. This creates more cash flow with less property usage. You are likely to create at least twice as much income with a short term rental.
You are Creating a Second Business, not just a Second Job
Once you have created your property to be a short term rental property you have essentially created it as its own business. Therefore, it can be sold that way when you are done owning it. In other words, you can sell the property for more value than just ‘a house on a lot’, as you have created additional assets around the property to run it like a business. Rather then the additional hours that a second job would consume, a short term rental property run by a property manager brings in a residual income with minimal effort.
There are definitely great reasons to explore ownership of a short term rental! The Motley Fool has some great financial information you’ll want to know regarding buying vs. renting a property.
*SOURCE: THE FEDERAL RESERVE BOARD’S SURVEY OF CONSUMER FINANCES FOR 2010. The Motly Fool – Investment and Real Estate Information – see link above.