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  • Michelle A

How To Invest In Short-Term Rentals

Real estate can be a great investment, but it is important to know which type of real estate property is worth investing in depending on your goals and objectives. Short-term rentals is a good option if you want to gain cash flow in shorter periods. However, unlike long-term rentals, there are many factors to consider, and it requires more upkeep for you to get good returns. I’ve got you! Here’s how to invest in short-term rentals:

Like all property investments, location is a crucial factor. It is not just because of how it will affect the property’s value, but it will also determine how often people will rent it, making it highly affect your income. In choosing the right location for a short-term rental property, you need to study your market. Which market would you like your property to target? People usually rent this type of property as a vacation home. Hence, choose a popular destination spot. After deciding on a location, make sure to research the legalities. Every city faces different regulations when it comes to property rentals, so educate yourself before you invest in one. Most cities have their own rental restrictions, such as, what types of property or structure are acceptable, minimum/maximum length of stay, and the taxes involved in a rental business. In knowing these regulations and legalities, you're ensuring you abide by them, and be compliant so that it won't affect your investment, as violations can have hefty fines.

If you think you can manage all the legalities in your chosen location, it’s now time to decide on the type of property you would like to invest in. Is it a condominium, a single-family home, or a multi-family home? It is important to do your own research or consult your real estate agent as each property has different features that attract potential guests. Know the pros and cons for each to find which property has the best investment potential for you. If there is a community association (or HOA) that manages the property, look into its governing documents: Declaration of Covenants, Conditions, and Restrictions (CC&Rs), Bylaws, and Rules & Regulations. These documents cover the the rights and obligations of the owners and the association. Some of these rules can be revised overtime due to changes in the community.

As a short-term rental investor, work doesn’t end after purchasing the property.

Furnish and prepare the property for listing. Marketing plays an important role for you to get the return of your investment. And you wouldn’t be able to market your property well if it wouldn’t be appealing to potential guests. People who rent out a vacation home plan to have fun but feel at home and comfortable at the same time. Decorate your property to give it a homey feel and provide everything that your guests may need during their stay like basic utensils, Wi-Fi, clean towels, and other essentials.

Take good photos of the home. You can even opt to hire a professional photographer to make sure that you have good photos on your listing. The last but definitely not the least thing that you need to do when investing in short-term rentals is analyze the cash flow.

The main reason why you invested in a short-term rental property is because you want to gain profit and get additional income. Compute all your investment expenses, assess your projected income, and evaluate if it can cover your expenses and provide enough profit. Setting the right price is the key to a fast return. Check similar short-term rental properties in the area to get an idea on how much you can set your rental rate. Be careful not to set your price too high or too low as it will definitely affect your cash flow.

Owning a vacation home for a short-term rental business is a great investment. You get to have additional income and at the same time, you get another place which you can stay in if you want to have a quick rest and recreation. Just make sure that you do not stay in there during the peak season as you wouldn’t want to miss out on potential revenue. If you have further questions about investing in short-term rentals, feel free to reach me anytime. I’d love to have a chat with you!

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