Short-Term Rental Properties: A Quick Guide for a Successful STR Investment
Feb 02, 2022
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Investing in short-term rental properties can be a good and lucrative source of income over time. You just need a considerable amount of time and effort to plan and take action based on your goals. So if you’re one of those considering joining me and investing in short-term rental properties like I do, check out this quick guide below to significantly help you increase your success rate in this industry.
Look for the Best Location
The location is an important factor in determining the value of your property. You can do some renovations and repairs to make your property look better and more presentable in the market, but you can do nothing with its location, I personally like investing close to home and in vacation type destinations nearby.
That’s why one of the very first things you need to focus on when you’re planning to invest in short-term rentals is to look for the best location, preferably near you or in a vacation destination you desire to frequent. You have to check the neighborhood around the area and the accessibility to the most frequented locations, like the supermarkets, shopping malls, restaurants, airports and many others. These will significantly attract more guests to your property.
Short-Term Rental Demand
When you’ve figured out the best location of the property you’ve interested in purchasing, now, you have to know if there’s a short-term rental demand. Always remember that the short-term rental demand is different from the residential demand. There’s a particular location that many people find a perfect place to live in for good, but others may not see it as an ideal location for a temporary home.
For instance, if the location you’re interested in buying is near a university, the chance is high that students will dominate the list of your potential guests or their friends and family visiting. Besides that, if there are various companies and other small businesses around the area, it means that most of your guests will generally be employees coming in to do work for those companies.
Boost the Occupancy Rate
We all know that the income you’ll be getting from your short-term rental property is coming from every guest who will be renting your space for a particular period of time. That’s why for you to become successful in this business, you have to boost the occupancy rate. It’s the number of booked days divided by the number of days available.
As a business owner, I know that it’s in your best interest to own a property that will have a higher potential occupancy rate. In fact, there are many ways you can do that. You only have to make sure that your short-term rental property is a place where your guests can find comfort, peace, and safety all at the same time. It’s because these are the things that will significantly boost the occupancy rate of your property.
Calculate Your Possible Expenses and Return on Investment
After finding out the best location for your short-term rental property and it shows a great potential for short term rental demand, you can go ahead and calculate the possible expenses and your return on investment in advance. Doing so will give you an idea of how much money you need to start your short term rental property business and how much income you will earn in the long run.
You can list all possible expenses, such as cleaning supplies, maintenance fees, property management fees, and many others. After that, you can now tally the amount you need for you to gain profits from all of the expenses you’ve listed. Then, take the total amount of your expenses from your possible monthly income to see how much you will get as your profit.
Also, don’t forget those items in your list of expenses that you can deduct from your aggregate taxable income. It’ll also help you boost your savings on a yearly basis. Just make sure you provide relevant documentation and proof to validate those expenses when filing your return to the IRS.
Takeaway
Investing in short-term rental properties has gained popularity to many investors across the country. In fact, the number of investors continues to increase every year, and many of them become successful when they spend much needed effort to do their research and due diligence considering all of the things we just discussed above. You will also want to explore the opportunities waiting for you in the short-term rental investment industry, so be prepared do the same. Besides that, if you need any assistance to start on the right foot, you can get in touch with me anytime for coaching and consulting.
As a real estate investor, short term rental coach and consultant it is my job to help you reach your goals faster, better and more efficiently. It’s my way of paying it forward to help make your journey more successful and less stressful.
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