Having a rental property investment means you have several options for building wealth. You can buy and hold rental properties, build a portfolio of income-generating properties, or even invest in real estate crowdfunding.
But what if you don’t have much money to invest? What if you want to put only some of your eggs in one basket by buying an entire apartment building? Can you still build wealth through real estate without a significant financial commitment?
Yes, you can. Short term rental property investment is one way to do so.
Short-term rentals are becoming more and more popular and for a good reason. It is an excellent option because it provides steady cash flow and long-term appreciation.
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What Are Short-Term Rentals?
Short term rentals are properties that are rented temporarily to travelers and vacationers, typically listed on websites like Airbnb or VRBO. These sites allow people to list their homes or apartments at a premium. Often, they would charge twice as much as they would if rented by someone long-term.
According to TechVestor, a $250K annual wealth created per property is feasible if you invest in a short term rental. If you want to maximize your ROI, look for properties in areas where tourists visit frequently and do proper marketing to promote your rental property.
Why Short Term Rental Investment Is Good
Staying in short term rental properties is becoming increasingly popular among vacationers, business travelers, and people who are looking to move but want to avoid the hassle of selling their homes.
But what makes them so appealing? It all comes down to the fact that you can make money off your property without dealing with the hassle of selling it. If you’re considering investing in real estate but need help figuring out where to start, having short-term rentals might be an excellent option for you.
Here are some reasons why you should consider investing in vacation rental property:
1.Steady Source of Income
Compared to other investments, rental properties provide a reliable source of revenue. You can count on having monthly income stream if your property is managed well and occupied most of the time. You can make money in exchange of providing a place to stay for your guests.
Guests staying at one of your properties who enjoyed their experience can leave positive reviews online. This will help your property to get more views on websites like VRBO and Airbnb. This means more people will see it and want to book it themselves. This helps build up your brand and reputation over time.
2.Low Maintenance Costs
If you own a house that you are renting out for long term, you may have to spend money on repairs. This is especially true if your tenants are unruly and lazy to take care of the property or if they damage it by accident.
However, when you invest in vacation rental property, you don’t have to worry about this since these homes are designed for short-term stays. You can charge them extra fees if they cause any damage while staying at your property. So there’s no need for expensive maintenance costs or repairs before they move in.
3.Tax Benefits
If you’re a small business owner, you can deduct all your property-related expenses when paying taxes. This includes mortgage interest, property taxes, insurance, repairs, and maintenance. You can also take advantage of the depreciation tax deduction. This allows you to write off a portion of your rental property’s value over several years.
4.Lifestyle Flexibility
Investing in a short term rental property allows you to work from home and be your own boss. You can choose when you want to work, where you want to live, and what time of the year is the best for you to rent your property. You can decide whether or not your vacation rental will be available on New Year’s Eve, Christmas Eve, or even during the summer months when school is out.
5.Low Risk
The risk associated with short-term rentals is much lower than with other types of investments. These are good investments because you can deal with low market fluctuations or stock market crashes that can negatively affect your investment portfolio.
In fact, most people who invest in short-term rentals prefer them over traditional long-term rental properties. This is because they provide a higher security and safety level than long-term leases due to shorter duration.
6.Quick Turnaround
The quick turnaround associated with short-term rentals means that investors will see their money sooner rather than later while still earning good returns on their initial investment. This makes it easier to recoup the costs associated with purchasing the property in the first place and any renovations or upgrades.
7.Diversify Your Portfolio
Diversifying your portfolio is difficult if you have long-term rental properties because they take so long to sell. Investing in vacation rental property allows you to invest in different areas of the country or even the world without worrying about their value falling or rising upkeep costs. This makes it easier for you to spread your wealth across multiple properties without losing sleep.
8.Build Equity Quickly
The value of a home increases over time as it gains appreciation and becomes more valuable. You will quickly build equity in your primary residence if you buy with cash or take out a mortgage. As your loan balance is paid monthly, you can also see your property’s value rise.
Different Types of Short-Term Rental Properties
1.Bed and Breakfast
A bed and breakfast is a home converted into an inn, offering guests lodging and breakfast. A bed and breakfast owner may be referred to as either a B&B owner or a B&B host.
2.Vacation Rental
This type of short term rental property is similar to a hotel, with guests staying in individual rooms rather than entire units. Vacation rentals are typically rented by the night or week, making them ideal for extended stays.
3.Cottage
Cottages are tiny houses that often come with yards and porches. They’re usually located just outside town, so visitors can enjoy peace yet close enough for convenience.
4.Studio Apartments
These are small units with one bedroom that offer minimal amenities but are still comfortable for travelers. Studios can be found in older buildings or even renovated houses. But they’re most common in urban areas where space is at a premium.
5.Private Residences
A private residence may have up to three bedrooms per unit. It can be located within an apartment building or multi-unit dwelling with common areas such as corridors, lobbies, and parking lots.
Wrapping Up
Rental property investment might be the perfect choice if you want to invest in real estate but do not want to be tied down by a long-term lease or mortgage. And if you’re looking for a way to get some extra income from your home, having short-term rentals can be a good option, too.
Short-term rentals can be a great way to earn income from your property without the hassle of renting it out long-term. You can still own your home and profit from it even if you don’t intend on living there all the time.
Having short term rental investments is the best way to get into the real estate industry. They’re easy to manage, appeal to all customers, and pay off quickly. You can start small by renting out one room in your home or apartment, then expand as needed.
