So... you own an extra home that you don't live in full-time and you're wondering if you could make some extra money renting it on a short-term basis?
Many investors are discovering the benefits of short-term rentals (STRs) over long-term rentals (LTRs). STRs can typically command a higher nightly rate. And even though STRs seem like more wear and tear on your home, they can actually be better for the health of your home. First, STR guests are typically very vocal if something isn't working, whereas LTR tenants may ignore issues happening in your home until they become bigger problems. Second, your STR is cleaned between every turnover, so dirt and grime barely has a chance to take hold.
So is an STR the way to go for you? Here are some important points to consider:
What does your HOA say?
If your home is part of a homeowner's association, you'll definitely want to consult your bylaws to determine if you're even allowed to rent your home on a short-term basis. Many HOA's specifically forbid STRs, but are more supportive of LTRs.
And just because your HOA is OK with STRs today doesn't mean they won't update their rules later on down the road, especially if other neighbors complain about having STRs in the neighborhood.
The ideal location for an STR is a home that's not part of an HOA, but some HOAs are very STR-friendly. Just be sure to do your research first!
What does your city/town say?
Besides your neighborhood, your city/town/county may also restrict your short-term rental. Be sure to do your research before listing your property.
Many jurisdictions allow STRs, but they require you to apply for a permit for the privilege.
Follow the rules. It's better than being shut down.
Is your house rental-friendly?
What exactly does "rental-friendly" mean? Well, it might be easier to explain what's not rental-friendly.
If you have superfluous personal items in your home and you have nowhere else to put them...
If your home has too many weird or unsafe flaws that you can't fix before listing, like steep steps without railings or electrical issues...
If your home is dated and unattractive...
... then your house may not be ideal for an STR.
Are you willing to make some up-front investments?
Airbnb's and other private short-term rentals have come a long way. While it's still possible to rent just a single room in someone's private home (where you might find their personal items in drawers or share a bathroom), many STRs continue to get more impressive.
It's not uncommon for investors to buy a home with the specific intent of setting it up as an STR. Some are million-dollar+ properties with theme rooms and home theaters. Some are castles in Italy and some are Airstreams on a compound with other glamping facilities. The point is, the bar is being raised, and to keep up in competitive markets, you need your place to stand out. Sure, it can stand out by being the cheapest option... but do you really want to host guests who are looking for the cheapest option?
When deciding to set up a STR, whether it's in a home you previous lived in or an investment property, you'll need to go in with a realistic idea of your up front investment.
Common things you might need to invest in:
Bed linens: We require 3 sets of sheets and 2 quilts/comforters per bed for seamless turnovers. If you've got a same-day turnover, you don't want to be trying to wash your only set of linens for the next guests. Oh, and we go for white sheet sets so they can be bleached. Quilts and comforters can be colorful to add to the ambiance of the room.
Towels: We require 3 bath towels x the total number of guests you can accommodate, about 3-4 hand towels x the total number of guests you can accommodate, about 6 wash cloths x the total number of guests you can accommodate, and 2-3 bath mat towels per shower/tub. And we recommend white, because bleach. If there's a pool or hot tub on site and/or there's a beach nearby, we require 3 beach towels x the total number of guests you can accommodate.
Enough furniture to support the number of guests you can accommodate. If you say you can sleep 8, you better have 8 chairs at your dining table and enough seating for 8 in your living room.
Technology: We set up all of the properties we manage with at least one exterior camera, a digital lock, Noiseaware noise monitoring, and a digital thermostat so we can monitor the security and operations of the property. While we provide these items free of charge to clients, they do represent a significant investment.
Random stuff: Every property is different, so it would be impossible to list every single thing you need to invest in. In order to know where to put your money, stay in your house like a guest. Imagine what it's like looking at your place with new eyes. What's intuitive and what's confusing or annoying or uncomfortable or old or unimpressive? For example, we were setting up an investment property with a pool/hot tub and there was no easy way to turn on the hot tub. A permanent resident in the house would just resign him- or herself to going to the side of the house to the main pool control box to turn on the hot tub. But a guest doesn't want to do that. They want the hot tub to turn on at the touch of a button. So we had to invest in a hot tub remote, which didn't come cheap, but was so worth it to improve the guest experience.
For more recommendations about our recommended amenities and supplies, visit our STR Shopping List.
And to find out if your home would make a good STR:
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