Should you consider offering your property as a short-term rental?

As rental property owners in a vacation destination city, my husband and I have often asked ourselves the same thing: Should we consider offering our property as a short-term rental? This option is very attractive because of the increased income potential. And, based on what we are reading online, vacation travelers are increasingly interested in renting a home or condo as an alternative to a hotel. From the vacationer's standpoint, a short-term rental has advantages in terms of affordability, atmosphere, and convenience.

Ashley Halligan, an analyst at Property Management Software Guide, recently wrote a guide for property managers and rental property owners who, based on the popularity of current trends, are considering renting their properties on a short-term basis. In this article, Risks and Rewards of Short Term Rentals, she lays out the various pros and cons of transitioning to a short-term rental business model.  

There is more than one way to offer your property as a short-term rental. You can market the rental to vacationers, event enthusiasts, to businesses as a corporate rental, and more. In all cases, there are additional expenses involved from furnishing the rental property, to cleaning / turnover expenses between renters, to possible additional fees and taxes.  It is important to do your research before transitioning to this business model to make sure you are fully aware of the expenses and requirements.

Short-term rentals also involve additional work to maximize the amount of income you can get from the property. When you have a vacation or corporate rental, you are always marketing the property and screening potential tenants. You also assume responsibility for regular property maintenance that usually fall to the long-term tenants (like changing furnace filters, mowing the grass, etc.). If you don't have the additional time to invest, you should consider hiring a professional property manager - it will be well worth the cost. If you are a professional property manager, you should make sure you have an excellent team to assist you with the additional work involved in managing vacation rentals.

I especially enjoyed reading Ashley's suggestion about how to evaluate the short-term rental potential of a property before you make the transition to that model or purchase a property with that intention. She provided some solid guidelines about evaluating the competition to see how many are available, evaluate rental rates, and find out what type of amenties they have.

If you are thinking about offering your rental property as a short-term rental or you are interested in managing short-term rentals for others, you should review Ashley's article yourself. In it, she outlines four risks and four rewards you should keep in mind before diving into this market.

Let's Talk. Do you have experience as an owner or manager of short-term rental properties? What have you learned? Do you have any additional words of advice?