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Investing in Short-Term Rentals: Expectations Vs Reality

9 min read

One of the most trending real estate investment sectors in recent times was short-term rentals. The upward trend was mainly attributed to platforms like Airbnb that had changed the game altogether. But many people expect COVID to have taken a toll on this sector. So does that mean investing in short-term rentals is not as lucrative as it used to be?

Let’s find out!

Things have changed and reports show that the US vacation rental investment landscape has changed drastically in 2020 due to COVID. However, after the pandemic, the only thing that seems to have changed is that the best places to invest for short-term rentals now look far more different than they used to.

So, are there risks when investing in short-term rentals?

To say the truth, one can’t really answer this question in yes or no. So, the answer is that it depends. Many investment portfolios that were seeing bright prospects at one point are now gasping whereas there are some others inundated with unprecedented demand.

The reality is that short-term rentals will not take a beating as a sector but it definitely will see changes in terms of its behavior and character. What does that mean?

It simply means that if you are an investor looking to widen your portfolio by investing in short-term rentals then you should start looking out for different locations – not the traditional ones.

This is because the travel-hungry American will definitely hit the road soon because surveys show that travel is what American’s missed the most during the pandemic. However, safety was a concern with most of those surveyed.

Investing in short-terms rentals: Look beyond the usual

So what are the places that figure in the list of short-term rentals? Most of the places that figure in short-term rental locations are off-the-path and have never really made their appearance before the pandemic.

Why is that? Here are the reasons!

· Business centered travel in the urban cities has stalled
· Work from home and online classes

You can get a list of the locations that are thriving and those that have active properties from different sites on the Internet. But before you start scouring through lists and research reports, we would like to give you a few tips on what to look for when investing.

How to choose a property for investing in short-term rentals

Location: Like with all tenancies this is a very important factor that determines whether your property will get the desired returns you are looking for. But before that, you need to decide the kind of guests you are targeting. Even though 2021 has changed the rules of the game, it is important that you see who your target audience is and whether your location will be suitable for their profile. Easy access to travel, tourist spots, and cultural precincts are always a lure for travelers.

Unique experiences: Surveys have shown that guests always look out for unique experiences in the accommodation that they stay in. Be it outdoor pools, rooftop views over a city, or a neighborhood, travelers love to stay in accommodations that offer something more than the others. Unique characteristics of your property can also be highlighted by you to charge premiums.

Added facilities: If you are buying a property with a certain target audience in mind that would enjoy facilities such as saunas, gyms, pools, and tennis courts then go for a property that already has that kind of an option. These are all add-ons that boost the value of a property.

Easily manageable: Investing in short-term rentals requires far more work than other types of tenancies. Simply, because such properties require more maintenance work. So, if you decide to undertake the maintenance, cleaning, and guest management on your own, then buy your property in close proximity to your location.
This makes it easy for you to manage things. In case, you buy a property that is too far then you can also engage a company like Airbnb to manage it for you.

Ease of access: When buying a short-term rental property bear in mind that you will be catering to all kinds of travelers, even those with restricted mobility. Seniors, children are all categories of travelers who may find it difficult to stay in properties with steep staircases. Having such things in a property could limit your bookings.

Also, tourists planning to stay on for long may carry a lot more luggage, and carrying it through a long winding staircase may not be that comfortable.

Conclusion

Investing in short-term rentals can still be lucrative if you understand the market dynamics and then take the plunge. The pandemic has changed the rules of the game but has not stalled it. There are pros and cons in this sector too all you have to know is how to swim against the tide. No matter what the trend, a smart investor is the one who knows how to leverage the trend in his favor. Look at the right place at the right time and you will surely make the cut.

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