Almost everyone has stayed at an Airbnb at some point when traveling. If you haven’t, you need to look up from your Blackberry, dust off your parachute pants, and join the 21st century. Short Term Rentals (STR) are convenient, more private, and less of a hassle than a hotel. You have all the comforts of home and don’t have to listen to the basketball team on the floor above you practicing for the tournament the next day.
Traditional Rental Investments
Traditional real estate investors have bought homes to put a long-term tenant into the property for a year or more. The benefit was guaranteed income for a long period of time. The downside is that many tenants do not take care of the property and wear and tear can be considerable. Turnover can cost the landlord thousands of dollars in paint, carpet, landscape, and misc. repairs.
The New Trend - Short-Term Rentals
Many investors have recently started transitioning those long-term rental properties into STRs where the home is occupied for 2-30 days at a time. Generally, those types of tenants (called Guests in the Short Term world) take much better care of the property, pay a higher rent rate and turn over costs are minimal.
A good STR can double the income produced versus a long-term tenant. While the monthly overhead can increase as the owner will pay for electricity, cleaning, cable bills, etc, generally, the net income is much higher than with a long-term rental.
What to Look For
When searching for an STR property you need to be aware of certain pitfalls to avoid. You want to look for properties that are in areas where STR is allowed. Some cities have recently begun enacting ordinances prohibiting STRs. South Lake Tahoe, CA recently made it illegal in some areas to rent a property short-term.
You also need to consider sleeping arrangements. More guests mean more income but also more wear and tear. Find a sweet spot you are comfortable with and look for homes that match your preference. Try to find homes that will hold up in the long haul. Good appliances and fixtures will help you stay profitable.
Hire Someone Local
Having a good real estate agent guide you through the STR buying process is a necessity. You may end up making a very costly mistake if you buy a home for STR and find out it doesn’t work or isn’t allowed. Find an agent local to the area and start your journey to STR owner off right.
Dripping Springs Elite is NOT a brokerage. It is a professional organization comprised of top real estate agents in the area from different brokerages who collaborate and work together to make buying and selling in their town the best it can be for their clients. DS Elite is also dedicated to building up our community and its nonprofits to strengthen the quality of life for all residents. Contact one of our agents today: https://drippingspringselite.com/#agents.
Article created for DS Outlook Feb 2023: https://www.dsoutlook.com/category/current-issue/