Over the past few years, the popularity of short-term rentals has grown exponentially. One opportunity for Southfield rental property owners is whether to buy or convert one of their properties into a short-term rental. Before making a decision, it’s always a good idea to thoroughly examine both the pros and cons of owning a short-term rental property. For many, short-term rentals are a good fit, but other investors may feel that the sheer volume of work involved does not make it a worthwhile venture.
One of the most significant advantages of owning a short-term rental property is the potential for increased rental income. Short-term rentals typically generate higher daily rates compared to long-term rentals. As a result, if you manage to keep your property occupied consistently, you could earn substantially more each month. Additionally, with short-term rentals, you have the flexibility to raise prices during periods of high demand, allowing you to maximize your profits.
One significant benefit of owning a short-term rental is the flexibility it offers. You can choose to rent your property for several months or just a week at a time, depending on your preferences. If your rental is located in a beautiful vacation area, you can take advantage of any vacancies for your personal retreats. Consider listing your property on rental platforms like Airbnb; this approach eliminates the hassle of dealing with leases. If you decide to switch back to a long-term rental, it’s easy to do so—simply remove your listing from those sites at any time.
However, there are a few drawbacks to having a short-term rental. The income is a lot less stable, even though the prospect of a higher income is greater. A good number of short-term rentals undergo seasonal fluctuation and that means your property might be forced to remain empty often. While impressive marketing and a sprinkle of creativity can help you circumvent this, it’s vital to remember that your best efforts may still be insufficient. Short-term rentals are highly susceptible to economic conditions, and economic downturns typically result in a decline in demand.
A critical drawback of short-term rentals to consider is the higher overhead costs. Setting up a short-term rental requires furnishing and equipping the property with the essentials for daily living. If you want your rental to stand out in a competitive market, it’s essential to use attractive furnishings and décor. Additionally, you’ll need to provide everyday essentials, such as linens, toilet paper, pots, and pans. These items must be replaced between tenants, which can lead to accumulating expenses over time.
Short-term rentals will require more cleaning and maintenance. Preparing the property for the next tenant can be a significant time-consuming task, especially if you are doing it yourself. Alternatively, hiring a professional cleaning service can be expensive, particularly if your property is located in a popular vacation area. It’s essential to ensure that the property is thoroughly cleaned between tenants and that any necessary maintenance and repairs are addressed promptly. Failing to do so could result in negative online reviews and a decline in future bookings.
As a final point, it’s vital to find out what are the state and local regulations on short-term rentals. Some places have created strict regulations that hinder the operation of short-term rentals in certain areas, much like many homeowners’ associations across the country. Due to restrictions being different from city to city – and even from neighborhood to neighborhood – it’s necessary to do your research before acquiring or transforming a property to use as a short-term rental.
Need help managing your current rental property? Give Real Property Management Advantage a call at 248-554-1010 or contact us online.
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