Four Things You Need to Know About Investing in Short-Term Rental PropertiesNov 09, 2021
The number of people interested in investing in short-term rental properties is continuously increasing every year. It only means that many investors today find tons of opportunities that come with this type of investment in the real estate industry. So if you’re one of them, like me, then please check out these details below about four things you need to know to make sound decisions when entering into the short-term rental property investment category.
Not All Realtors Have Enough Knowledge About this new Short-Term Rental Market
Not all realtors or real estate agents have a complete understanding of short-term rental property investments. That’s why if you are working with an agent you have to ensure that you’re working with an agent who understands STR and will help you in making every step and decision right and in line with your goals. So if you’re looking for someone to help you find the best short-term rental property, you can ask about their previous experience and they should know the difference between short-term rental market and residential long term rental markets.
Besides that, a good realtor can also explain things about regulations, seasonality, inbound tourism, HOA regulations, and many other important legalities concerning short-term rental property investments. Hence, when you find someone who has a wealth of knowledge about this type of investment, you’ll surely save more time and effort and purchase the best STR rental property based on your preferences of desired location and your allocated investment budget.
Legalities Around Short-Term Rental Properties
You have to know that some states, cities and HOA’s differ regarding law implementation concerning short-term rental property rentals. You can find other locations free of any regulations, but others may have restrictions on this type of rental property.
So if you don’t want to throw away the time and money you’ve spent looking for a property, make sure that you do your research well and find out the state-wide statutes, including the municipal, county, and HOA plans for this type of rental property. Hence, as much as possible, gather all important and relevant details that will help you finalize your purchasing decision and avoid purchasing an investment property to host a short term rental where there are restrictions.
Feature-Driven Demand of Your Property
When you’re looking for a new short-term rental property, I know that it’s in your best interest to find one with higher demand in the market you’ve chosen. With that, to see if it’s in demand in that particular location, you can check the various features of the property to invite more guests as well as compare other local listings in your area.
For instance, if it’s in the center of the city, having a parking space or a garage can be in demand for your guests. If it’s near the beach, having a 2-bedroom short-term rental unit can be more in demand than those with 3-bedroom rental units. I have a couple beach property with 4-5 bedrooms and they do great as well because 2-3 family’s can stay in our house together making it cheaper for them than getting multiple houses or hotel rooms. As you can see, the features of your property can attract a particular guest, which you need to look into when you’re searching for a new one in the future, nice amenities such as pools, hot tubs and covered patios with outdoor seating also offer a guest resort like vibes that will get you more bookings.
Inbound Statistics from Tourism Departments
It doesn’t mean that if a particular short-term rental in a specific location gets many tourists and travelers in the first quarter, it’ll be the same in the entire year. You have to understand that seasonality can sometimes be a significant factor in the occupancy rate of your property. For instance, the number of tourists and travelers will basically increase during summer, especially in the locations near the beach. With that, the tourism office in your area usually has data on inbound travel. We need to set realistic expectations during the down seasons and make adjustments to attract long term guests at a cheaper rate during those times.
You can ask them for valuable statistics that include important details, like whether the tourists travel by land or air, the duration of their stay, how many they are, and much other relevant information. So if you want to invest in short-term properties in the future, the inbound statistics from the tourism department can help you increase the occupancy rate of your property.
As mentioned earlier, investing in short-term rental properties is getting more popular as the number of investors continuously increases every year across the country. Hence, if you haven’t tried investing in real estate, this STR strategy is a great way to explore your opportunities in this industry. So if you need any assistance to make sure you’re doing the right thing along the process of acquiring your first or next short-term rental property, I am here to help. Just get in touch with me, and let’s start by establishing your goals and creating an effective plan to achieve your goals in the most efficient way.