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Short Term Rental vs. Long Term Rental

Want to quickly and consistantly make an extra income? Rent out your home, or your investment property! The question that often comes to the table is: “Which is more profitable – Short term rental, or Long term rental?” Does the length of rental commitment matter to overall income? Wouldn’t a long-term renter mean less stress? Won’t there be a shortage of short term renters because of availability, seasonal fluctuations, etc.? How can you learn the pros and cons for each rental style? Let’s have a chat, shall we?

A Common Misconception

Vacationers and Business travelers love Short Term Rentals!

Short Term Rental is a great option for vacationers and business travelers.

To uncover the facts, you must look at these two options below the surface. Financially and economical focus is essential. On the surface, long term rental seems more sound. It also seems like a whole lot less work. You are bringing in one client, estimating a rental time of 5 years on average, so the idea is that you will bring in more money. Hmmm, why is this a misconception? Let’s look a little deeper into Short Term Rental to uncover the answer.

Short Term Rental – The New Normal

A short term rental is classified as a rental occupied by a single client for 6 months or less. A short term lease is especially beneficial to traveling business clients and vacationers. Short term rentals are becoming the norm – the days of a hotel as the only away-from-home option are long gone!  The quiet atmosphere and comfort of a home over the stress of a hotel can’t be beat. With today’s open source traveling websites like AirBNB, people worldwide who are looking for a place to stay for the summer, winter, or any other short holiday, can easily find short term rental options.

Financial Benefits of Short Term Rental Uncovered

Short Term Rentals are more comfortable than a hotel!

Short Term Rentals are more comfortable than a hotel!

So, using your property as a short term rental as opposed to a long term rental usually IS more profitable! Why? First, owners can charge a higher nightly rate (translating to a higher monthly rate) than they would with a long term rental. It is likely that a single 3-day weekend could bring in the equivilent of an entire month’s rent in the ‘in season’ in any given city. Renting property can be compared to shopping at Costco: a customer who buys nights in bulk gets a discount, ( as in a 2 -year tenant ) but a customer who buys only a few nights, ( the short term renter ) pays a higher price. The long-term tenant will expect a lower monthly rent charge because he is committing. He is offering a sense of security to the property owners. A tenant who is renting a home for the summer, however, will pay more for the same exact property. He is paying for comfort, convenience and atmosphere, and because it’s short term, it’s only making a dent in his pocket. Additionally, if rent prices are on the rise in the economy, short term rentals can charge a higher rent price with each new lease. All these factors added together insure that the short term rental provides the homeowner with the highest income potential.

So then, back to our initial question: Want to quickly and consistantly make an extra income? It looks like Short Term Rental is the way to go!

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Rent YOUR Spare Room on Airbnb? Maybe…

You have heard about it – maybe used it…  Airbnb has become a phenom, there is no denying! An easy and inexpensive way to travel, Airbnb allows you to go online and find a room at a great price in someone’s home at your destination, rather than stay in a hotel. Maybe this isn’t your first rodeo and you are the Airbnb pro. Now, you want to take a stab at renting out YOUR spare room! Before you host, here are the top 5 things you should know:

1 – Familiarize yourself with Airbnb!

A no-brainer, right? There’s really quite a bit to know and quite a few great perks and protections from the website that you will want to study before putting your home in the mix. Learn what you as the host are required to provide your guest. Will you need a home insurance umbrella? Check out other host sites and see how they promote their spaces. Above all, if you are using Airbnb, STICK with Airbnb! Don’t be steered off the site to make ‘side deals’. You are safe sticking with the site. There is danger in murky water. Be informed before you dive in.

2 – Take Hot Shots!

Do you have a room you could rent to visitors?

Do you have a room you could rent to visitors?

It’s not just cliche’ – a picture really does speak 1000 words! Take a variety of shots from different vantage points in great light. Make sure ‘THE ROOM’ is clean, decorated, and has a few special touches in the photos. Have a rockin’ back yard? A swimming pool to-die-for? Grapefruit and lemon trees with ripe fruit? Be sure to promote it! Here’s a video to help you in taking great shots.Will the guest be able to park in your garage? Pimp that feature too!

3 – Be Clear About Amenities!

Be as descriptive as possible about your home. What size is the bed? Is there a bathroom attached? Are  there kitchen use priviledges? Is there laundry room access? Will the swimming pool be available? Is there wifi and NETFLIX? The more you promote your amenities, the better.

4 – They Expect What They Pay For!

Be sure to promote your home's finer points!

Be sure to promote your home’s finer points!

Be clear about the money. Do some research and comparison with others on the site. If you are a room rental virgin, you won’t have any reviews to back up what you claim, so a great listing price might be to your advantage. You might check out hotel rates in your area to see the competition… never a bad thing, right? And be clear! Be clear about your noisy neighbors, your street that gets 4 inches of water when it rains, and the loud garbage pickup at 6AM on Saturdays. You don’t want any nasty little surprises that ruin your guest’s stay – you want them to come back and bring friends!

5 – Note the ‘bnb’ part of Airbnb!

Bn’B implies hotel-style amenities in a home-like experience. So add some special touches! Include arrival snacks on a tray in the guest’s room with a carafe’ of Ice Water w/lemon. Add a magazine and a small stack of area menus, and attraction brochures on the nightstand. How about a few pool towels folded on the bed? Maybe a beautiful pitcher of flowers from your garden would be a nice surprise on the bathroom counter. In the morning, have a basket of muffins and some juices and water on ice in a little bucket on the kitchen counter. Keep a list of your favorite go-to local shops and restaurants in a plastic sleeve in a handy spot. The little things make the biggest difference!

Besides the perk of puttng a little extra cash in your pocket, you can have a terrific experience meeting people from interesting backgrounds when you share your home on Airbnb!

 

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3 Reasons Your Short Term Rental Needs a Property Manager!

You’ve DONE it! You have decided to use your home for Short Term Rental! It’s just the technicalities that are left now…finding some renters, deciding what to charge, and getting your home ready! Your entrepreneurial side says, “I can DO THIS MYSELF!”. On the other hand, there’s a voice in your ear saying, “There goes your LIFE! You’ll have NO free time! Think of the headaches! Hire someone to do it for you!”. What to do? Well, here are 3 reasons your Short Term Rental needs a Property Manager!

A Property Manager Finds Renters

One specialty of Property Managers is Finding the perfect tenant for your home!

One specialty of Property Managers is Finding the perfect tenant for your home!

Where would you find a trusted renter for your home? On Craig’s List? Yikes! A Short Term Rental Property Manager has resources that you don’t have, which will ensure that you find quality tenants. Most Managers collaborate with other companies to help you get exactly the right tenant for your own little “Bed and Breakfast”, and when he is discovered, we help you take care of the paperwork too!

How DO you decide what to charge?

A Short Term Property Manager will analyze your home. He will take into account your square footage, special features and details, local area rental rates, and other neighborhood variables. He will give you the best price to charge for your home depending on the season, local amenities and other important factors. Likewise, he will also be honest and tell you if your expectations are way out of range.

Preparing your home inside and out for Short Term Rental is key!

Preparing your home inside and out for Short Term Rental is key!

What do I do to prepare my home?

Do you have property that you want to make a short term rental but not quite sure how to get it rolling? A Short Term Rental Property Manager has Setup Services to get you on the right track. At STRM, we give you information on what to do with your personal property while renting out your home. We also provide you with a suggested checklist of items that will ensure your rental has what your guests need to have a fabulous stay. We can even stage the home for you, and take professional photos for the most appealing first impression!

These are just a few of the many benefits Short Term Rental Property Managers provide to guarantee you a successful experience renting out your home. Check out this additional article from Zillow to help you make your decision!

 

Want to rent just a room of your home? Be sure to join us next time when we will explore the single room rental option!

 

 

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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?”