Short-term Rentals: What are They?
It used to be that if you purchased a home to rent or were moving and were unable/not ready to sell, you had one option to rent. The long-term rental with tenants who signed a lease and lived in your home for a minimum of a year. With expanding social media, apps, and the high demand, short-term rentals have stormed the scene. So, what are they and is it the right option for you?
Understanding short-term rentals
The short-term rental market really built up steam in the last recession. After losing a job, many homeowners saw their spare room as a tool to pay the bills. And from there it took on a life of its own and boomed into a huge market around the world.
If you’re considering wading into the short-term rental world, it is important to understand what they are and how to protect your investment while making extra money.
1. The time limits are different.
A short-term rental is going to be a nightly/weekly/monthly agreement. As most people use them for vacations or short-term work assignments, most people want to book your space for very short periods of time.
2. Furnished and clean.
A short-term rental home or room is going to be furnished. And you are responsible for cleaning the space and making sure all linens are clean for the next guest. Remember people talk, and if you’re space isn’t kept neat and clean, you’ll receive bad reviews and lose future business.
3. Property you either live in or don’t.
A short-term rental can be a property you either live in or don’t. For some people, they have a spare room or a finished basement and use that extra space to rent in the home they live in. Others will rent their home while they’re away from it on vacations or work trips. But there are also home owners who have a home they don’t live in at all, and instead of renting it to long-term renters, they instead use it for short-term renters.
4. Potential for better income.
Depending on the popularity of a city, short-term renting can be more lucrative because of busy seasons you can charge more per night than you would in a long-term rental.
5. Use a site.
There are many sites now for short-term renters, like Airbnb or HomeAway. Take advantage of these sites for the community learning you gain from other short-term renters. Most of these sites also offer special policies to buy for your protection against your space being trashed.
6. Understand the law.
Nashville recently passed a new ordinance around investor-owned short-term rental properties. Be sure to read and understand the laws in your city, county, and state to make sure you don’t get yourself into trouble and pay the appropriate taxes.
Renting out your space, short or long-term, has inherent risk, but it also is a way to invest in your future.