With the growing popularity of sites like Airbnb, Vrbo, and HomeAway, more and more landlords are weighing the option to go short term. Before taking the plunge, consider hiring a property manager in Chester County and see what they can do to maximize your long term rental options. Read on as we examine some of the advantages and disadvantages of short-term rentals.
What is Short-Term Rental?
Also commonly known as vacation rentals, short term renting means someone is staying in your home for a limited time. Typically, these rentals range from a few nights to a few months. The expectations of a short term renter are different that long term, so check out these pros and cons below.
Pros of Short-Term Rentals
- Increased Rent: Short term rentals go by a nightly rate similar to a hotel reservation. So, in a desirable area, a landlord can bank the equivalent of 1 month’s rent in a much shorter time. On average, short term rates are about double what a long term lease would be per month.
- Added Flexibility: Short term listing sites are very user friendly, allowing you to block off availability and change rates as needed. Instead of being locked into a long term lease with set rates, you can seasonally set prices to maximize revenue.
- Easy Marketing: Many rental sites allow for free or low-cost listings with easy to use platforms. To get your property noticed, use professional photos if possible, along with dynamic descriptions highlighting area and home amenities.
- Tax Deductions: Short term landlords may benefit from added tax deductions that can save them in the long run. Items such as cleaning costs, insurance, management fees, or utilities are a few examples of what landlords may be able to claim come tax time.
Cons of Owning a Short-Term Rental
- Higher maintenance costs: Maintaining the general upkeep of a short term rental falls solely on the landlord. The revolving door of tenants will also speed up the wear and tear on your home. Also, you could find yourself replacing more everyday items such as linens or towels to ensure they are in good condition. Lack of maintenance can lead to bad reviews, in turn, hurting your business. Additionally, regular cleaning between occupants is vital, which takes both time and money.
- Renting furnished: Short-term rentals come equipped with all the comforts of home. This is part of the appeal; they offer a homey feel and more space than an average hotel room. Is your home unfurnished? Be prepared to budget for one-time furnishings and essentials.
- Competition: With so much money to be made, this a trend that has taken off in recent years. Competition is fierce, and landlords need to be prepared to set their rental apart. Luxurious amenities, modern convenience, professional photos, and even offering welcome baskets are things you should consider.
- Changing Laws and Restrictions: The short term rental market took off so fast that state and local laws have had to play catch up. That said, landlords need to stay informed regarding local and state requirements and restrictions on short term rentals. Not doing so could land you in legal or financial trouble.
Other Disadvantages to Consider
- Uncertain occupancy rate: Unlike a traditional long term lease, there is no occupancy guarantee in short term rentals. You could rent the home for two weeks a month or even not at all. That said, landlords need to be financially prepared for the potential of extended vacancy.
- Utility Fees: The landlord pays utilities in short term rentals. While you can try to recoup some of these costs as part of the rental rate, they are still your responsibility.
- Technology Upgrades: The majority of short term rentals operate with keyless entry. This is an essential upgrade for both security and convenience. Also, with so many different people coming and going, it’s not a bad idea to invest in a perimeter security system.
- Added Daily Workload: Short term renting is not a hands-off business. If you go it alone, you will need to set aside time for responding to questions, managing reviews, cleaning, or managing listings. Potential renters typically reach out to several properties, their messages must receive a timely response, or they may move on to another property.
Should I Consider Short-Term Rentals for My Chester County Rental Home?
So, is owning a short term rental right for you? There are some advantages depending on your investment goals. That said, there are also some significant cons to consider. Long term rentals provide more financial stability than short term options and, with proper management, can help you reach your profit goals. Consider hiring a property manager in Chester County and see what they can do to maximize your long term rental options.