The idea of short-term rentals has risen in popularity during these past few years. As a Dover rental property owner, you might have considered buying or converting one of your properties to a short-term rental. While short-term rentals work perfectly for some, other investors find the demands involved are too much. Before any decision is made, do your research on the pros and cons of owning a short-term rental property.
The ability of a short-term rental property to make a bigger profit margin is the main reason why property owners choose this method. You can earn more in terms of dollars per day for short term rentals compared to a long term rental. Your property can earn more each month compared to a long-term lease, for as long as it is always occupied. Short-term rentals let you increase prices during times of high demand, allowing you to maximize your profits.
Another nice thing to have when owning a short-term rental is the flexibility it affords. Whatever suits you, you can choose to rent your property for a week or a month at a time. If your rental property is in a nice vacation spot, you can take advantage of vacancies and use it for your personal getaway. If you list your property on rental platforms like Airbnb, then you won’t have to deal with leases.No need to worry should you decide to switch your property back to a long-term leases as you can easily remove your listing from these sites anytime.
But there are a few drawbacks to owning a short-term rental. Although it promises high rewards, these rewards may be less stable. Most short-term rentals experience seasonal fluctuation and this means that your property could be sitting empty for a long time. Marketing may help weather the storm but remember that there are storms that are way too strong. Short-term rentals are very dependent on 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.
It is important to consider another disadvantage for short-term rental and that is higher costs. This means that you keep buying essentials as part of your short-term rental preparation. For your property to be competitive you would need to have nice furnishings and décor. You also need to provide your tenants with things like linens, toilet paper, pots and pans, and more. These items will need to be re-stocked between tenants, which translates to a higher expense over a period of time.
For a short-term rental, cleaning and maintenance is a must. If you’re doing this yourself and getting the place ready for the next tenant, this can take a lot of your time. You could opt to hire someone but this would add up in expenses if your property is in high demand. As a cardinal rule, the place should be cleaned between tenants, and necessary maintenance and repairs are done on time. If you forget to do this, you could receive bad online reviews and it hurts financially to get fewer bookings as time goes by.
Finally, find out about state and local regulations on short-term rentals. Some cities and homeowners’ associations have different regulations for short-term rentals. Restrictions vary greatly between places so it is important to do your research before buying a property if you intend to use it for short-term use.
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