The rise of short-term rentals grew dramatically for the past few years. As an Orlando rental property owner, it may have crossed your mind to buy or to convert one of your properties to a short-term rental. While short-term rentals work perfectly for some, other investors find the demands involved are too much. Don’t just jump into the short term bandwagon, do your work first and examine the pros and cons of owning a short-term rental property.
The ability of a short-term rental property to make a bigger profit margin is the main reason why property owners choose this method. Short term rentals trump long term rentals in terms of per day earnings. In an ideal situation, when the guest leaves and somebody moves in right after, your property can earn more, than a long-term lease. Short-term rentals let you increase prices at times of high demand, allowing you to maximize your profits.
One more advantage of owning a short-term rental is the flexibility it offers. You have the freedom to have your property rented for a week or a month at a time. If your rental property is in a nice vacation spot, vacancies may mean no cash flow but it opens up for a personal getaway. Take advantage of rental platforms like Airbnb by setting up your property there and say goodbye to leases.No no need to worry should you decide to switch your property back to a long-term lease as you can easily remove your listing from these sites anytime.
But of course, there are a few drawbacks to owning a short-term rental. Although it is true that it generates more cash, it is also less stable. Most short-term rentals experience seasonal fluctuation and this means no income from your property for a certain time. While good marketing could mitigate this, be prepared that sometimes your best efforts may not be enough. Short-term rentals are very sensitive to economic conditions, and economic downturns often result in less demand. For example, you may have noticed that the short-term rental market has suffered a lot this year due to stay-at-home orders and travel restrictions caused by the pandemic.
It is important to consider another disadvantage for short-term rental and that is higher costs. This means that you keep buying essentials as part of your short-term rental preparation. Furthermore, if you want your property to be competitive, you need to invest in furnishings and décor. You also need to provide your tenants with things like linens, toilet paper, pots and pans, and more. These items need to be re-stocked in between tenants so that means your expenses will add up.
For a short-term rental, not only is cleaning and maintenance important, there is more of it. If you’re doing this yourself and getting the place ready for the next tenant, this can take a lot of your time. You could opt to hire someone but this would add up in expenses if your property is in high demand. It cannot be overemphasized how important it is to have the place cleaned in between tenants and that maintenance and repairs are done on time. Miss this part and you could get bad online reviews. It’s the last thing you want to experience in this business as it translates to fewer bookings in the future.
Finally, it’s better to be informed by checking state and local regulations on short-term rentals. There are strict regulations in some cities and homeowners’ associations when it comes to short-term rentals. Also, restrictions vary greatly from city to city or place to place so do your research first before converting your property into a short-term rental.
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