There are many advantages to a short term rental over your typical long term rental. Whether you already have a rental property or are looking to find your first income property consider these reasons why you may want to consider the short term rental route.
1. Higher than average rental revenue
Renting your property out for the short term creates higher nightly rates than renting by longer terms (i.e. 3, 6, 12 months). This creates more cash flow and with less property usage. With short term rentals you may have the option of turning that cash flow negative property into a cash flow positive property. So don’t sell it before you look at this option. Contact us to let us help you figure it out.
2. House is used less
This happens for two reasons, the higher rental rates and guests treating your home better than your typical long term renter.
Because rental rates are higher, the property can make the same as it would as a long term rental with much less nights used or it can be booked solid and bring in crazy revenue. Properties also have the potential to make more income and with significantly less use.
For example, your property could be booked solid (every day occupied by a renter) and the home would still be used less than by a long term renter. Guests tend to not use a home in the same way a long term renter does. There may even be parts of the home or furnishings that never get used (like a dresser for clothes). Travelers also tend to be out and about exploring the area more than your long term renters.
3. Better maintenance with regular cleaning and inspections
Because guests are coming and going, cleaning and home inspections are a regular occurrence. This allows you the freedom to see how your home has been used, what needs repaired if anything, and the ability to make repairs early. This makes it easier to keep clean and therefore requires less home replacement costs per year. No more guaranteed carpet replacements and other large maintenance items that eat into your return on investment.
4. You can use the property at any time
Ever think that it would be nice if I could actually use my property when I am in town. With short term renters you can. Short term renters come and they go which allows you, the owner, to use the property whenever you need it. Maybe your property is in a vacation location or an area you travel for work. The property is yours so you can use whenever you don’t have guests scheduled there.
5. Owners can “house swap” with other rental owners
It is like having your own little hotel chain around the world. Rental owners from all over the world are willing to swap their place for yours allowing you to stay in fantastic locations with little to know out-of-pocket costs to you. Go ahead, milk that cow.
6. Property is sold as a business instead of just a property
Once you create your property to be a short term rental property you are essentially creating 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 the property as you have created additional assets around the property to run it like a business. With a property manager, it truly becomes a hands-off business.
7. Tax implications and depreciation benefits
Depending on how often you personally use your rental property, if at all, will determine how you are taxed as well as if depreciation for your property can be accounted for. Check out this IRS page for more information.