During the past few years, short-term rental options are getting popular. As a Grand Rapids rental property owner, you are probably weighing the option of buying or converting one of your properties to a short-term rental. There are property owners who swear by short-term rentals, but other investors find the hassles that come with it are not worth their time. Before you make a decision, weigh the pros and cons of owning a short-term rental property.
A short-term rental property typically commands a higher rental price so this is the main reason many property owners choose this method. In terms of dollars per day, short term rentals are higher than long term rental. If the turnover of tenants is fast, your property can earn more than a long-term lease. Short-term rentals let you increase prices at times of high demand, allowing you to maximize your profits.
One more advantage that a short-term rental brings is flexibility. You can choose to have your property rented a week or a month at a time. If your rental property is in a nice vacation spot, vacancies may not entirely be a bad thing as you can use it for your personal getaway. Then, do away with the hassle of leases by setting up your property on rental platforms like Airbnb. You can easily convert your property back to long-term rental by just removing your listing from these platforms.
But it’s not perfect since there are a few drawbacks to owning a short-term rental. Although it is true that it generates more cash, it is also less stable. Most short-term rentals experience seasonal fluctuation, so your property may not be earning for a time and that’s something you may not like. While marketing and bright ideas can prevent this, sometimes, you just can’t win. Short-term rentals are very sensitive to economic conditions, and economic downturns often result in less demand. For example, you may have noticed that the short-term rental market has suffered a lot this year due to stay-at-home orders and travel restrictions caused by the pandemic.
Another factor that you need to consider is that short-term rental equates to higher costs. Stocking up on essentials is part of a short-term rental. Also, for your property to be competitive, you would need to buy attractive furnishings and décor. Your tenants should be provided with things like linens, toilet paper, pots and pans, and more. These items need to be re-stocked in between tenants so that means your expenses will add up.
For a short-term rental, not only is cleaning and maintenance important, there is more of it. Especially when you are doing all the work in preparing for the next tenant, this will consume a lot of your time. Hiring someone could be a solution but you should also check your bottom line as expenses add up especially when your property is in high demand. It is extremely important that the place should be cleaned between tenants and maintenance and that repairs are done on time. Otherwise, you could get bad online reviews and thus suffer fewer bookings in the future.
Finally, don’t forget to check state and local regulations on short-term rentals. Cities and homeowners’ associations have strict regulations for short-term rentals. Since restrictions are not the same from city to city or even between neighborhood to neighborhood, it is best to do your research first before deciding to convert your property into a short-term rental.
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