Short Term Rentals

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Are you thinking about investing in real estate? Possibly in the short term rental market (AirBnB, Vrbo, etc)? This option seems to be an increasing trend over the past few years. That being the case it can be both a wonderful income making opportunity, or a pitfall from taxes and legal regulations. Before starting this venture lets take a look at the pros, cons, and some cautions I would like to send any new investors.

Pros

1. Additional Income: The reason you plan on investing! Short term rentals can be enticing purely because of the opportunity of additional income. Depending on the location and demand, owners can charge a premium for a short term rental or even provide a deal compared to rentals close by. If marketed and priced correctly this can be a significant source of income.

2. Flexibility: Short term rental properties offer some interesting flexibility. As the owner you can choose when to make the property available, how long or short a stay can be, and what type of property you choose to invest in. This can be particularly helpful when you plan to use the property for yourself during certain points of the year.

3. Tax Benefits: There are several tax benefits to owning a short term rental property, including deductions for mortgage interest, property taxes, and maintenance expenses.

4. High Turnover: If you have a bad renter, remember you are never stuck with them for a long period of time.

Cons

1. High Turnover: I know, I said high turnover was a pro, but it can also be a con. The guarantee of a tenant with a long term rental means a consistent, reliable income. That plus the cleaning and maintenance between renters is greater when you have a higher number of people coming through the property.

2. Wear and Tear: With the increased number of guests, comes the increased amount of wear and tear on your property. Like a hotel room, people will treat a temporary location with less respect than they will with their "own" home, whether it is a long term rental or a place they own.

3. Management: The property must be maintained, between immediate concerns or damages and the day to day maintenance. This means that either you must be close enough to do this work yourself or have a property management company available to take care of your property, taking some of your income to pay for this convenience.

4. Taxes: Because a short term rental is an income producing property, there can be extra taxes on just the rates taken in during the rented periods. These taxes vary by area and must be taken into account when calculating income.

Taking on an investment property, and making said property into a short term rental, can become a large project and sometimes a large income producing opportunity. I would like to make note that each area has different rules and regulations for short term properties. Please find these rules, or ask your real estate agent, about the local regulations on short term rentals. Some areas require licensing and subscribed distances between rentals, whereas other areas don't care about any of these things. Please be sure that the property you want to invest in can also be used in the way you are intending. Your real estate professional is a resource to make sure your decision is made with as much knowledge as possible.

If you can find the right property, accounting for local rules, regulations, and management, investing in a short term rental can be a great income opportunity. Don't be intimidated by the startup tasks as it is the growing pains of being an investor. If you have any questions please feel free to reach out to me or follow me on any of the social media platforms you enjoy. I give real estate tips, market updates, and local activities for the Northern Nevada-Tahoe area. I would love to help you invest in your future!

Thanks to Brian Garrity, Alexandre Chambon, FilterGrade, and Aislinn Spaman for your beautiful photos.