Hey there, future real estate mogul! If you’re dreaming of diving into the exciting world of short-term rentals, you’re in for a treat! Here’s a little checklist of items to look for to help you find the perfect investment that makes your heart full and your investment account thrive.
1. Location, Location, Location
Think of location as the foundation or the ice cream base to your sundae. You want your property to be nestled near popular attractions, cozy cafes, or bustling city spots. A fabulous location draws guests like bees to honey, ensuring your rental is always in demand.
2. Market Demand and Trends
Let’s play detective! 🕵️♀️ Scour the short-term rental market for clues about demand. Peek at trends in tourism, shopping centers, local events, and seasonal events. Websites like Airbnb give you the scoop on occupancy rates and average nightly prices, so you can make the best decisions. Check out travel guides or blogs to the cities you are wanting to have your property.
3. Property Condition and Appeal
You want a property that looks like it jumped straight out of a Pinterest board. Look for homes that have a clean, bright and airy appeal (or if they can be made into one). A well-loved and charming space will attract guests like moths to a flame. Keep an eye out for properties that need a sprinkle of love rather than a complete makeover. Here are some more before/ after pictures for inspiration.
4. Legal Considerations
Every fairy tale has its rules! 📜 Make sure to check local regulations about short-term rentals. Licensing, taxes, and zoning laws are like the magic spells that keep your investment safe and sound. The biggest mistake you can make early on is throwing down big bucks on your Air BNB to later find you are banned due to permitting restrictions. Call up your local county and ask for their STR (short term rental) department. Knowing the rules means you can focus on your exciting rental journey.
5. Financial Projections
Let’s get a little number-crunchy! 💰 Calculate your potential earnings by balancing potential rental income against expenses like mortgage, maintenance, utilities, management fees. Rule of thumb when estimating your income – keep it conservative. I repeat – very conservative! If you expect your rental to be booked 200 days of the year, reduce that by 20% in case it is not booked as much as you hoped it would be. If you expect your bills to be $3,000 a year, add an extra $2,000 for unexpected issues that may arise. It’s all about making sure you profit at the end of the year and your Air BNB will be a money maker for you – without being stressed!
6. Annual Return on Investment Goals
A rule of thumb for your annual investment should be more than what you can get sitting in the bank. If you can get 5% a year in a savings account, then 10% a year profit will be great! For example, if you had $100,000 in the bank earning 5% ($5,000 per year) is fine. But, if you can earn 10% or $10,000 profit on an Air BNB than its a great investment. Aside from the cash flow you will also have tax benefits of owning a home plus the appreciation on the property when you go to sell it. This is a handy investment calculator to help crunch the numbers.
7. Competition Analysis
Keep an eye on your competition! 👀 Check out other short-term rentals in your area. See what they offer, their pricing, and what guests are saying in the comments. If you see rave reviews that people loved the books at a rental, head over to Goodwill and pick up a few boxes of books to integrate into your house. Do you see another rental with a hammock on the patio that people love? Where could you integrate one in your home? This knowledge will help you see other things you can offer (that guests appreciate) and also have a leg up on your competition.
Conclusion
Investing in a short-term rental property can be an exciting adventure filled with possibilities! By considering location, market trends, property charm, legal aspects, financial projections, and competition, you’ll be well on your way to finding a fabulous investment that will bring extra income for you monthly and excellent asset to your portfolio. Contact me if you’d like to talk more about your investment!
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