The idea of owning a short-term rental is becoming increasingly popular, with the use of online rental sites such as Airbnb and Booking.com, it’s easy to become a host and list your short-term letting property.
They are also a great alternative to hotels and are becoming highly sought after when choosing short-term accommodation. Short-term rentals are also increasingly being seen as an excellent investment tool, and if you’re reading this, you might already agree.
If owning a short-term rental is such a great idea, why isn’t everyone doing it? Well, let’s take a look at what you should know about owning a short-term rental:
First of all, what is short-term letting?
Short-term letting can be any length of time from 1 day up to 6 months. With sites such as Airbnb and Booking.com, short-term typically means anything from 1 day up until 1 month.
There are many reasons as to why guests might need to book a short-term stay:
- Temporary accommodation
- Travelling for work
- Holiday makers
- Getting to know the area better
Those are all great reasons for the guest, but what about for you?
The Advantages of Short-Term Rentals
With short-term lets, you have a lot of freedom and flexibility when it comes to what dates your property is available for bookings. You can choose how much or how little you wish to rent out your space.
This could be the ideal situation if you wanted to live in your property for part of the year, but won’t be occupying your space all year round. You can rent your property out while you’re not there, giving you that financial freedom feeling and ensuring that your overheads are covered when you’re not around.
2. Better Profit Than Long-Term Lets
When maximising your bookings, you could actually be making more money than long-term rentals.
The Telegraph suggested that short-term lettings charge around 30% more than long-term lettings, so, as a short-term host, you can make more money, faster.
3. Quick Turn Overs
You should expect to have a lot of guests coming in and out of your property with short-term bookings.
It can be a positive thing, as you’re likely to experience less wear and tear on your property because you can frequently keep up with small repairs before they turn into bigger problems.
As a host or landlord, you have the right to refuse a booking if you are unsure of the occupant. However, the great thing about offering short-term stays is that your vetting process doesn’t have to be super lengthy and super thorough, unlike long-term rentals.
If you have a negative guest experience, you don’t have to worry too much as they shouldn’t be around for too long.
4. A Better Alternative to A Hotel
Short-term stays are primarily targeted at holiday makers or workers who want more of homely and exclusive experience, compared to a hotel.
Airbnb is a great way for guests to really feel that they are getting great value for money, because often, it’s cheaper to stay in a short-term rental than it is to stay in a hotel.
Not to mention, Airbnb’s offer a unique stay with lots more privacy and space compared to the hotel industry.
The Disadvantages of Short-Term Rentals
5. Is it worth the risk?
Possibly the biggest disadvantage to short-term letting is its risk factor.
Your risk factor will vary from rental to rental and will heavily depend on what you need from your rental’s income. You could possible only be renting your space out for a bit of extra cash or maybe you need your mortgage and overheads paid for.
Unfortunately, short-term letting cannot ensure income consistency, as some months your space may be fully occupied and other dates you could find that your property isn’t being booked up enough.
If you’re an experienced host and find that you have this problem, it could be worth taking a look at your pricing strategy.
6. It’s a full-time business
Assuming that you want to rent your property out all year round, you could find that it’s more effort than you first imagined.
Maybe you wanted a passive and relatively hassle-free source of income, unfortunately, running a rental property, especially a short term let, requires quite a bit of effort, organization and time.
To manage your property successfully, you will have to be nearby for your guests, as the main port of call if something goes wrong or they need assistance. Your space will require regular maintenance (general checks, repairs and cleaning), quite possibly after every guest stay.
If you choose to maintain your space yourself, then expect a relatively time filled schedule. However, you could possibly outsource help by hiring cleaners and or a maintenance team to help you manage your time. Although, these will come with a fee, decreasing your overall profits.
It’s not impossible to have a hassle-free income with short-term renting. You could outsource to a management company that specializes in caring for your property, optimizing your rental’s prospects and helping to increase your bookings.
7. The other issues:
There are a few other strings attached when it comes to short-term rental that can be a bit of a disadvantage: coping with your neighbours, keeping your guests happy and dealing with negative reviews.
Although, some of these disadvantages aren’t only specific to short-term rentals but can also apply to long-term rentals too.
The Overall Score
With most things in business, there’s always going to be advantages and disadvantages about any decision-making process.
It’s a no brainer! If you already have the space and it’s unoccupied, you certainly should strive for financial freedom or maybe even just a financial break.
Short-term rentals offer great rewards and a high income, especially when compared to long-term rentals. However, it’s important to note that the risk factor can be high if you have specific targets and goals you need to hit with your revenue each month.
Do you need help with reaching your short-term property’s full potential? Speak to one of our advisors today at Keey, to find out how we can help you succeed.