With the surge of short term rental websites like airbnb.com and homeaway.com, along with their ease of use for the consumer, short term vacation rentals are very much an option for today’s real estate investor. Location is everything in this scenario. If you live in a city that is popular with tourists, you may want to look into the vacation rental market.
When it comes to a hard money loan, the requirement for a fix and hold property – meant for the rental market – is that the local market and comps show that the investment will be able to pay the loan note. So, if in your community, a typical 3/2 rents for $1600 a month, and your monthly note would be $1000, you are in a good position to acquire a hard money loan, taking taxes and typical upkeep costs into consideration as well.
But – what would happen if you turned that annual lease into a vacation rental? Check into short-term rental rates in your community. You may find that you could easily rent your property in 2-7 day increments and double your money or more.
For some, in the right community, short-term rental is a great way to leverage your investment. Keep in mind there are some expenses and work required in short-term rentals that you won’t encounter in a yearly lease agreement.
The property must be fully furnished, and many times linens and toiletries are expected. There is cleaning to be done after each guest vacates. Vacation rental income is typically taxed differently than regular rental properties, so additional taxes may be due. And, you will want to list your property online, leveraging the power of the larger sites, but also incurring additional costs.
Luckily, as the short-term rental market grows, so do services to help things run smoothly. Cleaning services that specialize in B&B’s can be well worth the money. Some areas have linen rentals for bedding and towels available. Take a look at your area, and give short-term rentals consideration when making your next real estate investment.