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Why Should Landlords Invest in Short-Term Vacation Rentals

Why Should Landlords Invest in Short-Term Vacation Rentals

Understanding the market of long-term rentals is only a part of how the real estate industry works. Savvy investors are now adding short-term rentals to their portfolios, especially with the rise of popular vacation sites. Do you wonder if such an investment is worth it? Or why should landlords invest in short-term vacation rentals? We’ve got all the answers right here. 

What is a Short-Term Rental

A short-term rental is a furnished residential unit that tenants can lease for a limited period. Unlike their traditional counterparts, that typically value an annual arrangement, guests can rent these self-contained apartments for a few weeks or months. These ‘short stay’ rentals are gradually becoming a preferable alternative to hotels, as they’re typically less expensive. Property owners that know how to analyze short-term rentals stand to maximize their investments and enjoy tremendous success.

6 Reasons Why Short-Term Rentals are a Good Investment

  1. You Can Earn More Money

Contrary to popular belief, short-term rentals can earn more money than their traditional long-term counterparts. It all depends on your location, strategy, and ability to crunch the numbers. You can reduce vacancy rates with a property that appeals to guests and tourists all year round. Year-round locations allow owners to make consistent income instead of depending on the season. Also, if you get a good deal on maintenance, such as cleaning, laundry, and repairs, you can easily make a ton of profit. Finding and negotiating reasonable rates can help you become a better vacation rental manager.

  1. It Diversifies Your Investments

Another great advantage of investing in short-term rentals is that it’s a way to diversify your investments. Expert financial advisors all recommend that diversification is essential for the success of your portfolio. As the saying goes, you shouldn’t put all your eggs in one basket. Even if you already have long-term rental property, short-term units operate with a completely different model and still count as asset diversification. Thus, whether you’re planning to buy your first property or are a seasoned investor, you can always add this rental type to your portfolio. 

  1. There are Several Options

When people think about short-term rentals, they often imagine luxury vacation homes. On the contrary, many guests with more modest tastes and means would be happy to rent a shipping container home in your backyard. In other words, you still earn money as a short-term rental if you don’t have the capital for a beachfront condo. What’s crucial is that you make your rental as cozy and attractive as possible. Then with the proper marketing, you’ll find tenants looking for what you have to offer. It should be noted that when you are selecting tenants to rent your property, using services such as Bond Rees is a great way to make sure that you are picking the right tenants so that you are not dealing with issues down the road.

  1. Multiple Tax Advantages

Property owners can take advantage of several tax deductions when they own a short-term rental. This law can offset one of the cons of owning such a property: dealing with more wear and tear. Since landlords can legally deduct money on repairs and maintenance from their taxable income, it isn’t much of a problem. Just ensure you keep the receipts. You can deduct staff salaries, travel expenses, property management fees, and property taxes. If you crunch the numbers correctly, you can remove over 20% of your net income. 

  1. It’s Easy to Find Renters

Thanks to the internet, it’s easier than ever for owners to find short-term tenants. Popular listing sites can match over a billion guests and hosts worldwide, and you can tap into that market too. Setting up an account on these platforms is usually straightforward, and you can put your house out there for travelers to see. With a knack for SEO marketing, the right pictures, and an ideal location, you could be hosting guests within a week. 

  1. You Can Use it as a Vacation Home

Finally, you can also reap the benefits of owning a short-term rental by using it as a vacation home. Many owners also use their rentals as a private getaway for business meetings and parties. This benefit can be a real plus if you like to take vacations in a specific area and don’t want to worry about accommodation. Although you won’t be able to include those days in your taxes, a mini-holiday would be worth the trip. If you already own a vacation +home, you could lease it out during the remainder of the year to earn more money. 

See Also
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3 Most Popular Vacation Rental Sites for Hosts 

  1. Airbnb

Airbnb is one of the most popular and trusted vacation rental sites. One of its best features is that it offers hosts an insurance policy to cover tenant damage. Such coverage can come in handy, considering you’ll have several guests trooping in and out of your property—all that at a host service fee of 15% or less. 

  1. Booking.com

Booking.com is another vacation rental site that’s quickly gaining notoriety. They allow hosts to choose their preferred payment option and only charge a service fee of 15% on each booking. Additionally, you can also list your property for free. 

  1. Expedia

Expedia is a world-renowned brand that allows renters to plan their entire trip. From air tickets to car rentals and, of course, short-term lodgings. That makes it easier for tourists to locate your property and fit it into their plan. 

Conclusion

There you have it! Understanding why landlords invest in short-term vacation rentals can help you make better financial decisions. After all, more profits, ease of finding tenants, and a personal holiday residence seem like excellent reasons to consider diversifying. If you’re worried about managing your property correctly, you can always outsource the job to an expert property management company. 

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