Managing a short-term rental may not look too involved from the outside. Some may think, “it’s just a matter of getting the place fixed up, listing it on Airbnb, renting it out, and cleaning up after guests.” People may even be under the impression that it is easy money. Well, before you go down this route, let’s talk a little more about this investment. Yes, it CAN be a lucrative income that can be passive when managed by a property manager. However, there are a lot of things that need to be considered in the beginning, and the process can be a lot more complicated if you decide to manage the rental on your own. Here’s what you should know…
It’s Imperative to Follow Local Laws and Handle Taxes Correctly
Before you can even get a property ready for rent, you ought to find out what the government’s rules and ordinances are in your area. You’ll find that not all cities have the same regulations for short-term rentals. Also, keep in mind that as the property owner you’ll be responsible for remitting the taxes collected from the short-term rental stays.
It’s a Business
A short-term rental investment is a business and needs to be treated as such. Make sure you have a solid plan in place. Know what your expectations are going forward. Think about your plan for operations, marketing, and how you’ll handle finances. Consider who will run the business. Know what makes your rental competitive in the market.
You may also be required to create a corporation or LLC, depending on what state you live in. This is a good idea even if not required since it can help protect you and your investment. There can also be tax perks to this.
It’s Important to Ask Yourself These Questions
There are several things you should know before venturing into this endeavor, and some of these answers will help you formulate your business plan. Consider who will handle your accounting, the house cleaning, and any needed repairs. Also come up with a plan for how guests will enter the home (with a smart lock, a hidden key, etc.). Think about how guests will be able to get a hold of someone when needed (24/7). Also, think carefully about what rules you’ll set for the property.
Careful Planning Needs to Be Taken to Get the Property Ready
You need to know that the property you rent out should be in excellent condition, including being up to code. You need to make sure that it doesn’t have any code violations, that it’s sparkling clean, and that everything is in good working condition. You also want to consider what updates may help entice more renters to choose your property since it’s a competitive market. Do some research, see what others are offering, and consider what guests will desire from this location.
Getting the property ready for guests means also coming up with the right pricing. It’s essential to have competitive pricing so that it covers your expenses and allows you to earn a profit, while also being reasonable enough that guests want to choose your place. This can take some time and research to determine if done alone, especially since you’ll want to consider how pricing might vary during peak, shoulder, and off-peak times as well as during holidays. You may also consider whether you’ll discount the rate if guests stay for longer than a set number of nights.
Marketing your property takes extra work too, you’ll need to consider where you’re going to list the property and advertise it. You’ll also want to write a great description and capture some high-quality photos to put with your listing.
In addition, don’t forget to include a handy guidebook to assist guests. This is an important part of readying your property for rent. It can be something that is sent digitally or left at the property for the guests.
Choosing whether to invest in a short-term rental or not takes careful consideration and planning. Like any investment, you need to consider the potential risks and rewards before moving forward. You also need to have a detailed plan for how you’ll run your business.
Think carefully about these things and make sure to do research on your local area. Know what the laws are and what is needed in order to get started. When you’re ready to start the process of getting your property ready for rent, please don’t hesitate to reach out to us at PMI. We can handle everything from preparing your property to marketing it to accounting and everyday management. Check out our website to learn more: {{account:public_name}}. We’d love to help you with your investment property.
