Short-term rentals are on the rise
Short-term rentals are on the rise as an investment trend for property managers and owners. They are also attractive to vacationers and business travelers as an alternative to conventional accommodations.
Because of the growing popularity of these rentals, there's been heightened controversy surrounding the legalities, tax implications and city oppositions to them. At the same time there are obvious revenue rewards. So, property owners should weigh both the pros and cons when considering purchasing an investment property or converting an existing property. Additional risks and rewards to be aware of include:
- Competition - Because of the increasing popularity of short-term rentals, keeping up with competitors can be expensive. Offering up-to-date and creative amenities can be costly. Furthermore, the costs of advertising and marketing can add up quickly.
- Community Risks - Some cities and neighborhood organizations fear that short-term renters increase the likelihood of crime. Complaints have also stemmed from parking issues and noise disturbances.
- Preservation - Some property owners prefer short-term rentals because they feel the renters are easier on a property. Because there's regular turnover, owners are able to provide regular maintenance and be sure it's being well-taken care of.
- Income - Higher rates are commonplace for short-term rentals. Rates can be particularly profitable during peak seasons and special events. In some cases, property owners have reported generating as much as 25% of their mortgage in a single night.
Ashley Halligan, an Analyst at Property Management Software Guide, created a guide for property managers and owners considering making the switch. Using market analysis of geographical trends from HomeAway and interviews with industry professionals, her article highlights four risks and four rewards that all managers and investors should consider before delving into the market.