When it comes to renting out your home, there’s a lot to consider. First, you have to find an ideal property. Then you have to furnish it, advertise for tenants, manage the accounting, keep up on cleaning and repairs, handle rent and tenant issues, all while still spending time with your family and working your full-time career. And while real estate has proven to be an excellent source of passive income, it does require some work to get things running smoothly.
Another important decision you have to make when renting out your property is if you’re going to focus on long-term rentals or short term rentals. The short-term rental business caters to travelers who are only using your property for a short amount of time while they’re in the area, usually for vacation or business. Long-term rentals focus on tenants who will be living in the home for an extended period, often over a year.
If you want to reduce the wear and tear on your property and earn a decent income, short-term rentals are the way to go. There are many reasons why homeowners choose to do short-term rentals instead of long-term, but here are four of the most popular reasons.
More Rental Income
Short term rentals are great because they allow you to adjust the price per night based on a variety of different factors. Guests expect to pay top dollar for vacation rentals during peak seasons, or when there is a special event, convention or attraction nearby. Many owners earn the bulk of their income during these peak seasons. While a long-term tenant may provide a more consistent income, short-term rentals allow you to make more in the long run. If you look at the income on a year round basis, the short term rental market should outpace the long term.
Reduces Chances Of Getting Stuck Risky Leases
Everyone runs across a tenant that is messy, rude, needy or overwhelming. The great thing about short-term rentals is that you’re not stuck with them for long. If you use your home for long-term rentals end up with a challenging tenant, it can turn into a much bigger headache. You also don’t have to worry about time-consuming and costly eviction process to get them out of the home if they’re not holding up their end of the deal. A short term rental allows the homeowner to make money year round without getting locked into long term risky leases.
While some argue that long-term rentals mean a more consistent paycheck, there are definite challenges to renting your home out to long-term tenants. Landlords seem to lose a bit of control when it comes to tenants who are living in their property long-term, and if you’re going to be stuck with a tenant for an extended period of time you want to make sure they are a good fit, which can take a lot of time and money to do correctly. This includes extensive background checks, contacting referrals, and other time-consuming processes that will help you find the most qualified tenant.
Many vacation homeowners purchase property in a location that they enjoy visiting. This way, when the home is empty, they can experience it for themselves. This takes the hassle out of booking hotel accommodations. It also provides a comfortable and familiar place to stay when you’re on vacation. You can even blackout weeks to ensure the home is available for you to use. Long-term rentals don’t offer the same luxury.
Less Wear and Tear On The Property
For the most part, guests treat a short-term rental with care and respect, since they’re very aware that it’s not their home. Since the property is not occupied 365 days a year, there should be less wear and tear on the property. They are also usually out and about more often than long-term tenants, which means less wear and tear on the house. A thorough clean in between guests allows the owner to keep an eye on the status of the property, and take care of small issues before they turn into big ones. Short-term guests don’t hang pictures or rearrange picture, so the home stays in basically the same condition during their stay. Long term tenants make themselves at home, are home more often, increasing the wear and tear they put on the property. Since the
Running a vacation rental costs money, but thankfully some of the money you put into your rental is tax deductible. Generally, since you are running your vacation home as a business, you can write off all of the expenses required to earn income, just like a business. If you purchase something for the vacation rental that will only be used at the vacation rental, you can deduct the whole cost of it. If the item is used both for your personal use and the vacation home, then you can only deduct the business portion.
When it comes to your tax deductions, it is essential to understand a few key terms:
- Gross income is how much money your rental brings in total
- Net income is how much you have once you’ve deducted all of your expenses.
- Current expenses are the everyday costs associated with running your business.
- Capital expenses are also considered asset purchases, and have a use life of over year. These expenses are still deductible, but must be deducted over a long period of time.
Some of the most significant write-offs that come in handy as a short-term vacation homeowner are property and improvement depreciation, fees and insurance, cable, lawn service, internet, advertising, pool services and of course, rental items.
Diversify Your Investments
If you’re new to the investing game, or you just don’t have real estate as part of your portfolio yet, short-term rentals are a great way to diversify. Short term rentals help to insulate your investment portfolio from sudden changes in the market. And as a bonus, the income earned from a short-term rental property could cover the mortgage on an existing property, making it a profitable way to get started with real estate investments. Of course, it’s important to consider all the numbers to make sure you’re in the right financial spot to make a significant investment.
Hiring A Property Manager
Whether you choose long-term or short-term renters, you’re going to need a concrete plan about how to juggle everything that comes with effectively running a rental property. Some responsibilities of a rental property homeowner include:
- Finding and screening tenants
- Advertising and marketing
- Maintenance and cleaning
- Managing rent
- Staying current on rental laws for the area
- Handling tenant issues
This can be a full-time job; a job many people don’t have time for on top of their career and personal life. This is why many homeowners, especially those who manage the revolving door of guests in a short-term rental, hire a property manager to help things run smoothly. A property manager can act as a fresh set of eyes and ears on a property when the homeowner can’t be around. They can handle the accounting, legal, and marketing side of the rental, while also collecting rent and handling routine and emergency maintenance issues. They are responsible for managing the reservations, scheduling cleaning, and communicating with tenants. Hiring the right property management team is what makes the difference between a rental situation that is profitable and stress-free, and one that’s not.
That’s Where Gia Comes In
Gia is a solid, dependable and experienced property management team made up of homeowners, for homeowners. We provide comprehensive short term rent management for busy homeowners. We understand how much work it takes to run a vacation rental business successfully, and our goal is to take on most of the responsibility so you can reap the benefits of a vacation rental without it consuming your life. Some ways Gia makes vacation home ownership easier and more profitable include:
Handcrafted Vacation Listings
Your vacation home is one of countless homes on the market, so for you continually get new guests, your vacation home description needs to stand out. Our qualified team not only hand picks every picture to ensure your home looks its best, but a specific description is designed to showcase your home’s best features. We know what major rental sites like Airbnb are looking for in a description, and we create a rock solid vacation listing that will ensure more people see your property.
24/7 Team Communication
Not only will you have unrestricted access to our user-friendly homeowner dashboard, but your guests will always be just one phone call away from the help they need during their stay. With top of line in-home features and unparalleled guest service, your guests will never feel like another reservation. And you’ll never feel like just another homeowner. We strive to connect with guests and homeowners to give both the service and attention they deserve.
If you’re going to trust someone with the details of your rental home, you want it to be with someone who has plenty of experience. Gia’s team consists of seasoned vacation homeowners and investors who solve problems quickly, are effective communicators and believe excellence is the only option. Gia will use years of experience and expertise in the vacation rental industry to serve both you and your guests.
Short-term vacation rentals are a great way to keep your calendars booked and your rental income flowing in. They offer the flexibility and control that you just don’t get from a long-term rental. But even the most stunning investment property won’t bring in consistent and positive cash flow if it’s not taken care of correctly. Hiring a professional property management team geared towards serving homeowners is one of the smartest investments any homeowner can make.
If you’re considering investing in a short-term rental property, contact Gia for the next step in your real estate investment adventure.