How to Create Wealth From Short-term Rentals

What are short-term rentals?

A short-term rental is exactly what it sounds like. It is when a home, whether it be an apartment or a house, is available to stay in for short-term periods. In most cases, short-term rentals are similar to a hotel. Typically, guests stay for less than 30 days at a time. As a result, the property is listed at a daily rate. The most well-known of these short-term rental companies is Airbnb. They allow you to book a stay pretty much anywhere and also allow you to become a host yourself. 

How do short-term rentals differ from long-term rentals?

Rent/Income – As mentioned before, short-term rentals are not meant to be occupied by the same person(s) for a long period of time. Therefore, the rent can be changed more easily than with long-term rentals. Since with short-term rentals, guests don’t stay long periods of time, vacancies can be a bigger issue than with long-term rentals.

Maintenance – Short-term rental maintenance can be very different than maintenance with long-term rentals. With long-term rentals, for the most part, most of the maintenance happens when a tenant leaves the unit and turns it over. It is very rare for furniture to be changed. With short-term rentals, there is usually going to be more wear and tear because guest turnover is much higher. Additionally, with short-term rentals, you also have to maintain furniture, bathroom supplies, toiletries, and kitchen utensils and gadgets. If something is wrong with the property, it is the owner’s responsibility to spot and repair any issues. However, the property is typically not inspected as much as a short-term rental because someone is living there for a longer period of time. Making it harder to enter. Inspections may only happen every 3 to 6 months for long-term rentals, which means it’s harder to find problems. On the other hand, short-term rentals have more tenants leaving and staying during the year. This allows for inspections to be made every time a tenant leaves, making it easier to find issues

Occupancy rate – While short-term rentals may make more money monthly, it can be harder to predict when your property will be occupied, and when it will be vacant. In contrast, long-term rental occupancy is easier to predict. Their lease states how long they will stay and how much they will pay. However, in both instances, tenants and guests are never guaranteed. 

Utilities – As stated previously, short-term rentals are similar to hotels. This means utility bills are normally paid by the host. This means you may have to pay for electricity, water, internet, gas, and possibly more. For long-term rentals, this is not the case. Tenants are normally responsible for paying these bills every month but if the property is an apartment or condominium, the owner will have to pay for electricity in common areas such as hallways and entrances

How to do well as a host

Arguably the most important thing when it comes to renting out any property is to make it look attractive. Something as simple as new paint or the right furniture can catch the eye of a potential guest. When it comes time to post pictures of the property, make sure that the photos are of good quality, and highlight the positives of your property. Hiring a professional photographer could be very beneficial when it comes to displaying your property. Nevertheless, you shouldn’t be hiding anything you know is significantly unattractive or a problem. Any listings listed on Airbnb and VRBO rely on guest reviews. If you get too many bad reviews, it will probably lead to lower occupancy. Not to mention the fact that not disclosing defects is unethical. 

The location also affects the price of a property, and short-term rentals are no exception. Location affects how much rent can be charged for a given property. In addition, the location of where the property is in the town or city itself is an important factor. In your short-term rental listing, you should detail what’s special about your property and what amenities are close. Make sure that as part of your due diligence when purchasing an Airbnb property you include a check for the crime rate in the neighborhood. 

Setting the right price is crucial when it comes to any property. Being aware of how much properties near yours rent for is key. Even looking at hotel rates nearby can help because they are so similar. Generally, you want to have a price that will attract guests while at the same time being profitable

Being a great host will also increase your chances of having more guests. If your guest feels that they had a pleasant experience, they may leave good reviews letting potential guests know that they’re more likely to enjoy their stay. Additionally, it also lets you know that you are doing a good job. But what makes a great host?

  • Cleaning your property every time a new guest will be staying should be mandatory. Whether you hire services or clean the property yourself is up to you, but the guest does not want to deal with a messy property so they shouldn’t have to.
  • It is always said that small things matter most, and that couldn’t be more true when it comes to hosting a short-term rental. When you stay at a hotel, you may notice that they have amenities such as towels, telephones, snacks, and even maps of the surrounding area. So why should your property be any different? If you are competing with any hotels in the surrounding area, find ways for potential guests to stay in your property instead of a hotel by adding the little things.
  • Equally important, is being respectful and thoughtful of your guests. Good customer service and responsiveness are key considerations to getting good reviews. 

In conclusion, a short-term rental is an alternative way to produce cash flow from a property. It has become increasingly popular in recent years and it may stay that way for a while. If it is something you are interested in, always be sure to research and learn as much as you can, to avoid problems, minimize your stress and maximize your profits.