4 Benefits You’ll Get When You Invest in Short-Term Rental PropertiesDec 23, 2021
In recent years, short-term rental property investment has become so popular with many investors not just in the U.S. but even in different countries worldwide. In fact, many investors in the real estate industry are usually devoted to long-term lease agreements. However, the more income you’ll have, the higher rewards you’ll get in the long run. But with short-term rental properties, there are various strategies that will let you enjoy the benefits while allowing you to take advantage of these investments, and here are some of those.
Availability for Personal Use
A benefit you’ll enjoy when you invest in a short-term rental property is that you can use it for personal use whenever you need one in the future. If you need time for yourself or a quick vacation leave from your stressful work or from the busy city you’re living in, you can stop receiving guests in the meantime and enjoy yourself in your vacation rental property. Besides that, if you also have a family, you can bring your wife or husband and your children to your rental property and enjoy quality time together. Keep in mind that personal use should be limited to 14 days per year, not to worry if you perform some maintenance or work while you are there then those days do not need to count towards your 14 days of personal use.
An Increase in Your Income
Another benefit you’ll enjoy when you invest in a short-term rental property is that you can expect to increase your income by 2-4x normal long term rentals. Short term renters who come to enjoy your property like they would a hotel are willing to pay a premium above and beyond what long term renters can. Since you have the house fully furnished and set up with utilities and entertainment they are able to pay more to stay in your rental property.
Many investors may be thinking about all of the expenses every time they acquire a new property, especially short-term rentals. Basically, it’s true. However, they need to know that the money they pay for establishing a short-term rental property can be tax-deductible. In fact, every penny you spend from your own pocket for things like transportation every time you visit your property, can be deducted from your rental income.
Besides that, if there’s a need to improve or repair your property, like repainting or replacement, it can also be part of your tax adjustments. On top of that, for cleaning services fees and supplies, these too can be tax-deductible. As you can see, the more you level up your short-term rental property to boost the occupancy rate and your income every month using your own money, it will be given back to you in the form of tax deductions. You only have to make sure to provide all relevant proofs and documents for these expenses when you’re filing your tax return to the IRS and definitely consult with your CPA and real estate attorney, I’m not one and this is not legal or tax advice.
When you plan to sell or refinance your residential property, the appraisal will usually be based on the fair market value in the location. However, if it’s a property that generates an income regularly, the appraisal procedure could also consider the income approach. This means that as long as you can show that your rental property is earning on a regular basis, and show a 12-24 month income history you could influence a higher appraisal, resulting in more money when you plan to sell or cash out refinance it in the future. From my experience a fully furnished home shows a lot better and usually influences a higher appraisal especially when you have a rock star interior designer like my wife Lindsey set up your rentals.
In the real estate industry, it’s quite common for investors to take a risk that comes with investing in these properties. However, when you plan every step you make and take time to do your research to know everything you need to know, you’ll surely enjoy the rewards we’ve discussed above. So if you want to take advantage of these benefits, start making your investments in short-term rental properties today. Are you ready to get started now, shorten your learning curve and learn from my experience and mistakes from what I’ve learned over the years investing in vacation rentals? Get in touch with me TODAY, and let’s start from right here https://www.phillipwarrick.com/assessments/2147535391 by establishing your goals and creating a master plan for achieving them.