What is short term rental?
By: Justine Assal •
Short-term rental properties are homes that owners rent for a few days up to weeks at a time and may vary greatly from city to city due to licensing variations and local guidelines. With an advent of websites like AirBNB and HomeAway, the popularity and availability of such rentals in almost every market has made many local municipalities question, what constitutes ‘short term’ and how can such rentals be regulated to ensure quality and conformity to local rules and regulations. Short term rental is not new to the market and has always been popular in many resort areas where vacation homes are rented much like a hotel when the owners are not enjoying the property. In such areas where there is an established market of ‘vacation rentals’ you will usually find that there are established licensing / permitting requirements, and that the standards of properties to be more like that of hotels with companies that specialize in in rentals that conform to the local rules.
By contrast, a long term rental is usually 9 months or longer and often has the terms spelled out in a legal document called a lease. This is more frequently how a residential home is rented out and may provide a lower maintenance income for a landlord. This type of rental does not allow for a home owner to enjoy staying at the property however and this is why many holiday or vacation home owners prefer the flexibility of renting the property much like a hotel room leaving it available for their own vacation and that of their relatives and friends.
If you are considering the purchase of a vacation or investment home and interested in short term rental, consider the following:
As stated above, regulations vary greatly from city to city so it is a good rule of thumb to make sure you are familiar with local rules and whether you can legally rent your property as a short term rental and if so, what are the terms i.e. one week / one month etc.
Short term or long term rental?
One isn’t necessarily better than the other but with anything, pause to consider what best matches your scenario and your end goals. Short term rentals require the property to be fully furnished down to the sheets, knives & forks and must be well appointed to attract vacationers / holiday makers. They may require more on-going maintenance and the requirement to keep finding new guests / tenants and therefore the time spent on working the rental as a business will be increased. If you don’t want to stay in the home when you are in town, a long term rental might be an option for you.
Should I use Air BNB and similar online rental sites or a local management company?
Again consider your end goals, your consistency and dedication to keeping the property occupied and whether or not you’re technically savvy. Some people simply want a vacation home that they can enjoy when in town and the remainder of the time is managed by a local short term rental management company that will oversee all upkeep on the property and also be responsible for bookings of the property, much like a hotel. If this is the case, it’s a good idea to go and meet with 2-3 local companies, look at their ratings and reviews, understand their fees, commissions, and also what their typical nightly / weekly rents are for properties like yours. Where they obtain bookings from is another important consideration as some types of bookings may be more wear and tear on the home, for instance booking a traveling teenage baseball team might mean your house is home to 12-15 teenage boys (not that we suggest teenage boys are not kind to a rental home but it is good to keep in mind). Choosing the company to manage this property is an important one so do your research! If you have time to work the rental as a business, you are confident and adept with your ability to manage the bookings yourself, it might be an appropriate option for you. However, if you are not living locally near the vacation home, you will still need a management company to oversee the home maintenance. A broken air conditioner in the middle of summer with a guest vacationing in your home needs immediate attention and if you are an absentee owner, this is simply not always feasible to manage without local assistance. Some short term rental management companies will allow you to help supplement the rentals that they obtain for you with your own efforts. This might also be a good option.
If you are at the point of considering short term rental for your home, take the time to understand your options, the local rental rates, and the pros and cons as they relate to your situation. Good luck and remember to surround yourself with a strong and reliable team of professionals to help make you a successful landlord.
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