We have over 5 years of experience in acquiring, building, renovating, designing, and managing short-term rental and vacation properties in Utah and across the country. We know exactly how to design and how to market a property in order to maximize your return on investment. We always get the question “is it better to rent my property to long-term tenants or to short-term tenants.” Our answer is that usually the cash-flow analysis will show that you can make more money by renting your property to short term tenants however in some locations the cash-flow is higher with long term tenants. Let us run a cash-flow analysis for you to determine how you can maximize your return on investment.
What are the benefits of owning a short-term rental?
1. The short-term rental market is rapidly growing across the country.
More and more travelers across the country are electing to use Airbnb and VRBO as well as other short-term rental platforms during their vacations rather than staying at a hotel. There are several advantages to a short-term vacation rental as guests usually have access to the entire property that includes access to a full kitchen, multiple bath rooms, and in some cases their own private swimming pool. Short-term rentals are often more affordable than hotels for larger groups. Many people find they enjoy the practical comfort of a real residence over a commercial hotel, and short-term rentals allow travelers to interact with neighborhoods and residents as well as discover aspects of their destination they would never encounter at a hotel.
2. Short-term rentals can usually net more money than long-term rentals.
Short-term rentals can be very lucrative as daily rental prices can be increased according to the number of guests that are allowed, the market demand, time of year and local events, property type and the location. Even though the vacancy rates are higher with short-term rentals, owners are able to charge a higher nightly rate on the week ends and during peak seasons that will usually amount to more money that is collected each month.
3. Tax advantages.
Under the new federal tax law that went into effect on January 1, owners of rental properties that are operated as businesses will be able to deduct mortgage interest on these properties, along with business expenses related to the rental. If you operate your rental as a business, you may also be able to deduct up to 20 percent of net rental income from your income taxes.
4. Flexibility and you can enjoy the benefits of owning a vacation home that your family can enjoy!
Even if you are using your property as a short-term rental investment, you still have access to the property to enjoy it during vacancies. You can also block out future dates to allow family vacations, reunions or wedding events.
5. Less wear and tear on your property!
Most tenants spend their day exploring the city or they are busy with events during the day and use the property to sleep and cook dinner. If you maintain strict rules such as no social events and parties at the house or no animals allowed these rules can help to reduce the amount of wear and tear. Since tenants are moving in and out frequently, the property is not used on a daily basis and that also leads to less wear and tear. During the vacancies you can make any necessary repairs or maintenance and this should help to preserve the property for future guests. We have learned that the cleaner the property is the cleaner it will be left. As a host you are able to give a review for each tenant and one bad review can result in that tenant not being able to rent through some of the rental platforms again. The possibility of receiving a bad review helps to reduce unnecessary wear and tear to your property.
Equity Real Estate