Is renting out a property on a short-term basis more profitable than long-term leases? How should a property be equipped for short-term rentals? What is the best way to advertise a property? How much effort does it take to manage short-term rentals?
Short-term rentals, often referred to as “Airbnb-style rentals,” were hit hard by the COVID-19 pandemic. Despite the challenges, the market for these rentals is showing signs of recovery, and in many cases, only the highest quality properties have remained viable.
While it’s now more challenging than before the pandemic, short-term rentals can still be a lucrative business, often generating higher income than long-term leases. However, there are several important factors to consider before diving into this type of venture.
What Type of Properties Are Most in Demand?
A quick search online will reveal that the short-term rental market is still highly competitive. Simply listing any apartment won’t guarantee consistent bookings throughout the month. It’s crucial to set realistic daily rental rates based on the location and features of your property.
Properties located in city centers, close to major attractions, or with amenities like parking or a garage are particularly desirable. Even properties on the outskirts can be attractive if they offer good access to public transport – these are details to highlight in your listing.
How to Furnish and Prepare a Property for Short-Term Rentals
Interior design plays a crucial role in attracting guests. While expectations were lower a few years ago, today’s market demands that properties be fully renovated, with modern, comfortable furnishings. Gone are the days when an old family apartment with outdated furniture could fetch bookings. To be successful in the short-term rental market, your property must be freshly painted, have new windows, and be well-equipped with modern amenities.
In addition to basic necessities, your property should include high-speed Wi-Fi, cable TV, clean linens, and a well-stocked bathroom with towels, soap, and shampoo. Small details like a hairdryer, kettle, and complimentary coffee, tea, and milk can go a long way in impressing guests.
Kitchen essentials, including a microwave, dishes, and cutlery, are expected, as well as hangers in the closet. Providing an iron and ironing board can also be a nice touch, especially for business travelers. And, of course, having air conditioning is a must.
How to Successfully Advertise a Short-Term Rental Property
There are two main ways to attract guests: self-listing your property on popular rental sites or using a property management agency. Agencies can handle everything from finding clients to securing payments. However, the property owner is usually responsible for greeting guests, handing over keys, and checking them out.
Partnering with an agency can offer legal protection, but it also involves signing a binding contract that may not guarantee consistent bookings.
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If you choose to manage the property independently, you’ll have more freedom but also more responsibilities. For a successful launch, it’s advisable to start with lower prices to build up a good reputation through positive reviews. Be prepared for at least a year of hard work before reaching full occupancy potential.
The Commitment Involved in Short-Term Rentals
Running a short-term rental involves more than just listing the property and waiting for bookings. You’ll need to account for laundry services, cleaning between stays, and other recurring expenses. Poor maintenance or service can quickly result in negative online reviews, which will hurt your business.
Don’t forget to factor in the value of your time, as managing a short-term rental is a full-time job. You’ll need to be available 24/7 to handle issues such as malfunctioning Wi-Fi or other guest needs.
How Much Can You Earn from Short-Term Rentals?
With maximum effort and consistent management, it’s possible to earn twice as much from short-term rentals as from long-term leases on an annual basis. However, you shouldn’t expect the property to be booked every single day.
There will likely be slow periods, such as the beginning of the year, after the holiday season when demand tends to drop. On the other hand, there will be times when demand is so high that you’ll have to turn away potential guests.
In conclusion, long-term leasing provides a steady, low-maintenance income, while short-term rentals require much more work but can offer significantly higher profits. For those with the energy and entrepreneurial spirit, this can be a great opportunity for a highly lucrative business.