Real estate has traditionally been a safe bet for investors seeking high profits. However, in recent years, a new sort of real estate has emerged: short-term rental properties.
These generate higher profits than a traditional long-term rental property and are rented out for brief periods, usually less than 30 days at a time. More and more people are now considering buying short term rental as investments, even if they could also demand more hands-on maintenance than long-term rentals. Here are a few explanations.
Market growth for short-term rentals is evident
According to a survey, the global market for vacation rentals is predicted to rise by more than 7% annually.
Short-term vacation rentals provide a number of benefits over regular hotels that are making more and more travellers at ease with the idea of living in someone else’s house while on vacation.
Particularly for groups, short-term rentals are generally more economical. Short-term rentals give visitors the opportunity to interact with locals and residents and learn about parts of their location that they would never learn about at a hotel. Many people discover that they prefer the practical comfort of a real home to a commercial hotel.
Compared to long-term rentals, short-term rentals can generate more revenue
Owners can charge more for short-term rentals in the correct circumstances than they can for long-term rentals. There are numerous limitations to it, including the requirement for owners to take into account vacancy rates, wear and tear, market volatility, and other elements that may influence their rental business. But there’s no denying that under the appropriate conditions, short-term rentals have the potential to generate more income than long-term rentals.
Additionally, it is possible to generate ongoing income from short-term tenants. Many tourists who have a good time will think about coming back the following year. Inform your visitors that you value their business and would be delighted to have them return.
Your assets can benefit from a short-term rental property
Even if you own other real estate holdings, the market for short-term rentals is very different from that for other kinds of real estate. Additionally, if real estate isn’t already in your investment portfolio, buying short-term rental property can be a great entry point. You can protect your investment portfolio from market volatility by diversifying your holdings. Additionally, after doing their homework and crunching the statistics, first-time real estate investors may find that the income from short-term rentals is sufficient to pay off the mortgage on the property.
You may find short-term rentals that suit any taste and price range
Have no money for a beachfront mansion? Not an issue. From studio flats to mountain chalets, short-term holiday rentals come in all different types, sizes, and pricing ranges. Additionally, you wouldn’t be the first to want to rent out a tipi, tiny house, or tree house. In other cases, homeowners have even built additional homes on their own land to take advantage of a desirable location or a sizable lot that allows for expansion.
Owners of rental properties that are run as companies will be able to deduct mortgage interest on those properties as well as business expenses associated with the rental under the new federal tax code. You might also be eligible to deduct up to 20% of your net rental income from your income taxes if you run your rental as a business.
Finding renters is now easier than ever thanks to online marketplaces
You can advertise and book your short-term rental property more easily than ever thanks to online marketplaces like Airbnb. Airbnb keeps expanding. Since its founding in 2008, Airbnb has grown to 4 million listings worldwide—more than the top three hotel chains put together. Travellers are aware that they should use these websites to find available short-term rentals in their preferred destination.
Possessing a second home gives you flexibility
You can do whatever you want with your home because it is yours. Need a place somewhere to stay while having work done on your primary residence? You possess one. Do you plan to host a wedding or a family reunion? You have excess capacity based on the distance. Decide whether you want to move into a long-term rental or sell your home? It’s all up to you.
Is a short-term rental property the best option for you?
These are just a few of the factors that could influence your decision to buying short term rental property. Many people can find success on this path, but be sure to complete your research. You are the only one who can determine whether making an investment in a short-term rental property is wise.
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