{"id":1783,"date":"2022-06-19T02:18:18","date_gmt":"2022-06-19T02:18:18","guid":{"rendered":"https:\/\/blog.ark7.com\/?p=1783"},"modified":"2024-10-25T12:40:40","modified_gmt":"2024-10-25T12:40:40","slug":"guide-to-investing-in-short-term-rentals","status":"publish","type":"post","link":"https:\/\/ark7.com\/blog\/learn\/in-depth\/real-estate-investing\/guide-to-investing-in-short-term-rentals\/","title":{"rendered":"Guide to Investing in Short Term Rentals"},"content":{"rendered":"
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Betting on the stock market for a strong investment portfolio isn’t for the faint of heart. Stocks are\u00a0prone to volatility, whereas investing in the real estate market can effectively generate income without unpredictability. In fact, investing in short-term rentals can be just the diversification your portfolio needs.<\/span><\/p>\n

Short-term rental prospects are good. It might continue to be a popular investment option. If current property owners can continue operations\u00a0within the guidelines\u00a0that many cities and states have, short-term rentals may be one of the best investment options available.<\/span><\/p>\n

Some states have only recently allowed short-term rentals while others are in the process of passing legislation against them. In the state of Michigan, some cities and municipalities could prohibit the use of private residences for short-term rental use prior to a vote in October 2021. This change could be great for the state\u2014not just the investors who own these homes. Michigan, along with many other states, is one of the best places to invest in vacation rentals.<\/span><\/p>\n

It’s companies like Airbnb, VRBO, and Booking.com that have made short-term rentals a household term, which has made profiting from investing in vacation rental properties easier than ever. Instead of seeking out long-term renters and performing background checks, real estate owners can now capitalize on the demand for short-term housing and vacation rentals. Short-term rentals are typically rented for less than a month, so property owners can earn more in rent than if the home was rented on an annual basis.<\/span><\/p>\n

But let’s get into the details of short-term rentals, investing in vacation rental properties, and their viability for investors.<\/span><\/p>\n

What are short-term rental properties?<\/b><\/h2>\n

Short-term rental properties are rentals that have a lease of less than one year. These properties can be <\/span>single-family homes<\/span><\/a>, <\/span>multi-family homes<\/span>, condominiums, or townhouses. A person usually considers investing in vacation rental properties for short-term rental accommodations without the intent to live in the rental themselves.<\/span><\/p>\n

Vacation homes make perfect <\/span>short-term rentals<\/span><\/a>, especially in the best places to invest in vacation rentals: destinations popular with the tourism sector. But people who are in-between homes, such as those who’ve recently sold a home and are waiting for their new home to close, can also use a short-term rental to avoid getting locked into a year-long lease. The short-term rental industry has boomed in recent years, especially for families that wanted to spend time together without having to share public space. Having the space for large groups, bountiful kitchen setups, and more provides a more authentic travel experience.<\/span><\/p>\n

Short-term rentals are fantastic investment opportunities, but property management is a must, as is a good working knowledge of the local market.<\/span><\/p>\n

Are short-term rentals profitable?<\/b><\/h2>\n

If managed properly, short-term rentals can be extremely profitable. But this isn’t the type of investment that <\/span>generates income passively<\/span>. Before you decide to invest in this type of property, there are a few things you need to consider:<\/span><\/p>\n