Should You Venture into Short-Term Rental Property Management?

Real estate investment is one good way to build wealth. As we all know, it can generate ongoing passive income and potential for higher cash flow. Furthermore, the value of rental properties increases over time. This gives you the option to sell your properties at higher prices in the future or just keep them as part of your rental property empire. No matter which path you take, it’s still a win-win situation!

There are different types of real estate investment you can explore. But one that is taking the industry by storm is short-term rental property management. Keeping this in mind, you need to understand that there are mandatory leasing prerequisites that need to be fulfilled before entering into any rental agreement. You can visit this URL here to get an idea about what a rental application looks like. In this type of business, investors rent out properties to guests for a short period. Although the previous year took a different turn because of the Covid-19 pandemic, data from Mashvisor shows that the industry is likely to recover by the end of the year.

Why Start a Short-Term Rental Business?

Short-term rental properties are usually leased in as short as a few days but shouldn’t be more than a month. Compared to long-term rentals, you can rent them out for more revenue every day. This opportunity allows you to generate more income than what rents could be on long-term leases. Because of this, more real estate investors are considering short-term rental property management as their choice of business. Take a look at some reasons why this market is worth investing in.

Continuous Growth

Without a doubt, people love to travel. And perhaps, the need to have a break has intensified because of the strict measures that have been put in place because of the pandemic. 

The market for short-term rentals continues to grow because travelers want to save money. Of course, they would rather spend their money on other things during their vacation, like attraction tickets and food.

Take a look at the listings in different vacation rental organizations, and you’ll also see that it’s more affordable to book a short-term rental property than a hotel. The difference in price point is what attracts vacationers the most.

Furnished Setting

Most short-term rental properties are already furnished. They typically come with basic furniture, appliances, and even a laundry room that will be helpful for every guest. Some even have an on-site pool, which will definitely make a difference to the decision-making of vacationers.

It will also be less work on your part as an investor should you choose a short-term rental that is already furnished. But you always have the option to make more improvements to attract more bookings.

Compatibility with Any Kind of Budget and Preferences

Short-term rentals come at different prices. When searching vacation rentals websites, you can sort out listings to find properties that match your budget. You can invest in a studio-type property or a mansion; the choice is yours. Just don’t forget to consider the property’s location. The typical choice of short-term rental for guests is one that is near tourist spots.

Fantastic Return on Investment (ROI)

In 2019, the global vacation rental market size was valued at USD 87.09 billion as per Grand View Research. The same report says that the industry is projected to have a 3.4% compound annual growth rate (CAGR) from 2020 to 2027. This means that investors in the short-term rental market are in for great returns on investment.

Let’s say a property is rented out for $100 daily for 30 days. Then the potential return of income during the said period is $3,000. While you still need to pay certain short-term rental property management fees, you’re still in for a higher revenue compared to offering long-term rentals.

Steps in Starting a Short-Term Rental Business

If you want to be successful in starting a short-term rental business, you should know where to start. Here are the steps to make it a simple and stress-free process.

Choose a Location

Your choice of location can make or break your short-term rental business. So, before buying a property, evaluate the potential of its location. Is it highly visited by tourists? Is the cost of living affordable? Don’t forget to do a comparative market analysis (CMA) to know the occupancy rates in that location you’re eyeing.

Check the best cities for vacation rental income listed in this article to know where to buy your first property.

Buy a Property

Investing in a short-term rental is a serious decision that shouldn’t be taken lightly. Before you buy a vacation rental property, make sure that you are aware of its possible operating costs and potential rental income. This allows you to know if you’ll be generating a positive cash flow.

Create a Business Plan

A business plan gives you an overview of your business goals. It is a strategic tool that you can use to stay focused on the necessary steps for your rental property to succeed. It should include strategies to turn your property profitable, as well as a financial plan so you know where your money is going.

Prepare the Property

Win the trust of potential guests by making your property look good. We’re not only talking about the property’s charm here. You have to make sure that everything in it is fully functional.

You can install CCTVs, smoke detectors, and a well-lit path. Make sure to store some first aid kits as well. Give your guests the guarantee that they will not only be comfortable in your property but will also be safe.

Advertise the Property

The work doesn’t stop at remodeling your property. You still need to get the word out that it is open for bookings.

Start by capturing perfect shots of your property. If you have the budget, you may want to hire a professional photographer to do this work for you. Then, upload the pictures on your website, social media pages, or on multiple vacation rental sites. Aside from pictures of your property, you should also include a clear and captivating description to draw guests in.

In Closing

Real estate is a wonderful platform full of investment opportunities. While there are multiple options to choose from, one that shows a huge potential is short-term rentals. This sector will allow you to receive good returns, considering that a lot of people love to travel and need a good place to stay. Just make sure it is appealing enough and properly advertised to ensure a steady flow of bookings.
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