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3 Good Reasons to Buy a Short Term Rental Property

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

Condos make a great Short Term Rental choice.

A condo in a great area makes a great choice for a Short Term Rental

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

A Short Term Rental in a great location can command a great income.

A home in a great area can command at least twice as much income per month as a Short Term Rental

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.

 

 

 

 

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7 Pros and Cons of Owning a Short Term Rental

So you are considering turning your home into a Short Term Rental? I can think of some GREAT reasons to test the water…and I have also tossed around a few disadvantages in my mind. Let’s just get it all on the table. What are the Pros and Cons?

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One of our beautiful Short Term Rental options.

Some Compelling Advantages Are:

  1.  Flexibility –  You choose the days, weeks or months to rent. Rent as much or as little as you choose. There’s also the option to travel at the drop of a hat, and make money while you are gone!
  2. You are giving guests more privacy / more space than traditional Hotels – Short Term Rentals are perfect for families.
  3. Brings in more cash than a Long-Term Rental –  It’s easy to do the math: 1 vacation week at $1500 vs. $1500 a month to rent for a year.
  4. Great Deductions –  There are lots of common deductions for Rental Owners. Cleaning and Maintanance, Insurance, Management Fees, and Utilities are just a few. With enough deductions, you could record a loss and avoid taxes altogether.
  5. Tax Breaks –  The best home related tax breaks go to Short Term Rental Owners. Be sure to know the tax laws of your state. Go IRS Tax Topics-renting your home to learn more.
  6. Less Wear and Tear on the Property –  With renters going in and out frequently, you can keep up on small repairs before they turn into big problems!
  7. Social Benefits –  There are quite a few interesting people out there, and lots of them travel! Your next Short Term Rental aquaintences could turn into life-long friendships!
A Short Term Rental Swimming Pool

Many of our Short Term Rentals have swimming pools.

A Few Noteworthy Disadvantages:

  1. Less consistency in payments –  If you are banking on a steady income, a yearly renter is much more of a sure thing. There is a possibility that you may go weeks or months without a Short Term Renter.
  2. Must pay the utilities –  Long-term renters generally pay utility bills. Short Term Renters don’t.
  3. More risk involved – Because of the sheer volume of people passing through your doors, there is more liklihood of theft, breakage or problem renters.
  4. It takes more effort to run a Short Term Rental –  Generally, YOU become the innkeeper. You’ll be collecting payments, scheduling clients, and doing all the work to bring in renters. Instead of doing this once every 5 years or so, you’ll be doing it weekly!
  5. There are more Maintainance costs associated with Short Term Rental –  As the landlord, housekeeping, yardwork, pool mainainence and general upkeep fall to you. Not usually so with a long-term renter.
  6. Some Neighborhoods with HOA’s make it difficult and complicated to Rent Short Term – Let’s face it, your neighbors might get mad at you. They want quiet, comfortable surroundings where they feel safe and know everyone, and ‘here you go again’ having miscellaneous strangers in and out at all hours. They might file complaints, and some HOA’s sue homeowners who are Short Term Rental Owners

What to do? Weigh the pros and cons for yourself and make your decision. All in all, we think Short Term Rental is a pretty great deal, and we think you will too!

Join us again to hear the answer to the question: “Why Short Term Rentals?”

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Is A Short Term Rental Right For You?

If you have the asset of a home, a rental house, or an investment property, a Short Term Rental might be just the ticket you need to supplement your income! With the popularity of home sharing on the rise, your spare bedroom could become your bag of gold! This week, The Wall Street Journal published an article on financing your home through Short Term Rental.

Ginas Front DoorOne benefit, obviously, is the income! If you have a great location (near a National Park, Large Theme Park, Body of Water, etc.), and are willing to put forth some effort, you could charge enough to profit from the endeavor.

Another benefit of a Short Term Rental is that there is less wear and tear on the home. Upkeep is easy when you are able to quickly assess any issues and repair things in a speedy manner.

A third plus is a personal one – meeting new and interesting people from all walks of life! More than learning what it takes to be a great Short Term Rental host, you’ll benefit from making possible lifelong friends.

TELL ME THE TRUTH – IS SHORT TERM RENTAL REALLY ALL IT CLAMS TO BE?

Of course it wouldn’t be an honest portrayal of a Short Term Rental unless I share disadvantages also. You may incur a little bit more of a risk just because of the sheer numbers of people going through the home, as opposed to one 5 year rental. Success at being a Short Term Rental Manager will require more effort on your part. Depending on how you set it up, it can be like operating a hotel.  If you want guests to return, they had better enjoy their accommodations as well as their host! What rules and guidelines will govern your guests? What special touches will you provide for a more enjoyable stay? Welcome baskets? A meal or two?

Vacation Rental Ritter 2There are also legal issues to be aware of. What does your mortgage holder say about renting your home? How about your homeowner’s insurance? Do you have an HOA to take into consideration?  Familiarize yourself with tax laws, zoning regulations, and licensing requirements.

You can choose from well over a million home-share style accommodations available when you go out of town on business or for pleasure. All in all, the Short Term Rental Market appears to be here to stay, and is definitely worth tapping into. If you have the property to rent, willingness to work, and are willing to take minimal risk, you may just have a great supplemental income at your fingertips!

 

COMING SOON….7 Advantages and Disadvantages of Making Your Property a Short Term Rental