Is Buying a Short Term Rental The Investment For You?Guest Blog by: Michelle SmithIf you have been paying attention to the real estate market at all, you have certainly heard about Short Term
Is Buying a Short Term Rental The Investment For You?
Dated: March 14 2022
Is Buying a Short Term Rental The Investment For You?
Guest Blog by: Michelle Smith
If you have been paying attention to the real estate market at all, you have certainly heard about Short Term Rentals (affectionately referred to as STRs). Likewise, if you have taken vacations over the past few years, you have probably researched accommodations on platforms such as Airbnb or VRBO. For many, the idea of staying in a residence with facilities such as private rooms, a kitchen, and additional space is far more appealing than being limited to what a hotel room has to offer.
Many people are considering investments in real estate these days especially with other markets being so uncertain, but how do you know if a Short Term Rental investment is right for you?
Here is a list of factors that are important to consider when weighing your options to throw your hat in the ring to become a host:
By owning a STR, unless you buy it and then immediately outsource every aspect, you are basically joining the hospitality industry. Many believe that they simply purchase the property, list it on one of the commonly used platforms mentioned above and can just sit back and watch the income roll in! I certainly wasn’t of this mindset when I purchased our first property, but I definitely underestimated the time involved in hosting a Short Term Rental. When you get into this business you must treat it as such or you will certainly not get the return you are hoping for.
When travelers book accommodations through a STR host they are understandably looking for an experience. They expect accommodations that rise to a certain standard and a host that communicates in a timely fashion - in essence, someone who is readily available to enhance their travel experience. As a result, you must be willing to answer questions in a relatively short period of time - including nights or weekends, when guests, or potential guests, are active - and if you fall short of their expectations, you risk bad reviews, which affect your future bookings.
While it is certainly possible to purchase and run a STR while still working a full time job, especially if you have a flexible work schedule and/or are able to stay on top of messaging with guests and booking requests, it is super important to set expectations of timing and flexibility to ensure you get the most enjoyment out of your investment!
Property costs money, furnishings cost money, cleaning costs money! Purchasing the property itself is only the first step. To have a true understanding of what you could potentially earn when owning a STR, you must have proper expectations of all the expenses involved. Hosting guests, as with any tourism industry, means making sure you are providing the full experience. This includes, but is not limited to: high quality bedding, comfortable but durable furniture,a pleasing atmosphere, and recreational amenities - all of these items must be purchased, and if you are not intentional with research and planning for what your guests are looking for, your expenditures can far exceed the budget you set.
Unless you have tons of free time and invest in a STR that is literally in your own backyard, (I mean, if that is an option then go for it - we did!) then you will need to a hire staff that will handle things such as turning over your property between guests. Have you ever tried to launder an entire house full of bedding, comforters, sheets, pillowcases, towels, washcloths, and pool/beach towels in just a few hours? Hey, it could be a great substitute for your cardio day at the gym!
It's important to find finding trustworthy staff and forge relationships with reliable service professionals that can perform important tasks such as repairing an air conditioner that suddenly goes out, cleaning your property between guests, or checking guests in (if you do not have a property that can do contactless check in), these tasks take time and costs money to pay others. Additionally, your guest experience is dependent upon these staff members doing a great job and not missing important details. If guests find dirty accommodations this can lead to bad reviews affecting your bottom line.
Have I scared you away yet? I hope not! Despite all that I have shared above, owning a STR has been one of the most rewarding experiences I have had in years, and I have found a passion for creating amazing guest experiences. I also now own a beautiful little Villa in Costa Rica where my family can vacation AND that makes us money when we are not using it. There are many fun, exciting, and lucrative aspects to owning a STR. This short blog is just the tip of the iceberg. If you find yourself wanting more information there are a multitude of resources out there and I am always more than happy to share my own personal experiences!!
Sherry relocated from Maine in 2005 and has called North Carolina home ever since. Raleigh's tight knit feel was exactly what she needed when moving from smalltown Maine and attending North Carolina....
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