There are several reason why investing in the short term rental industry is the right move for property owners!
Recent growth of short-term rental industry
Travelers have widely adopted short-term rentals, such as the vacation homes you see on Airbnb, Booking and other such platforms, resulting in one of the most attractive profit industries. In fact, short-term rentals yield 30% more profits for homeowners/investors than long-term leases, with an estimated global market valuation of $169 billion in 2018 alone. The payout is big, especially when annual holidays come around.
Although this alternative type of accommodation was taking off 10 years ago thanks to Airbnb, the industry is growing at a faster pace than hotels, as it’s become more tech-enabled, with a keen focus on professionalization. Case in point: Bloomberg recently noted that “Airbnb spawned an ecosystem of startups” that support this industry, ranging from noise monitoring systems to temperature control solutions to keyless entry tools and more.
How does short-term rental market differ from traditional long-term rent?
The main difference is pretty obvious – the time period for which the given apartment is being rented out. While a typical long-term residential property lease is 1-year long, the average short-term reservation usually is a couple of days to a week.
The second large difference is the type of property that is being offered. It might not be that difficult to rent out a property which is located in a distant suburb away from town and has last been renovated 10 years ago for a long-term tenant, however it might be a lot more challenging to do this for short-term renters. The main users of short-term rental platforms are tourists and business travelers and in most cases they are looking for a place in (or close) to the city center. It also should be in a reasonably good condition and have all the basic amenities that a traveler might need – fresh towels, iron, hairdryer etc.
What are the benefits of short-term rent?
In our opinion, we see three main benefits to renting out your property in the short-term vs long-term.
First, if the property is well suited for short-term rent (good location, condition, design) it is likely to provide a better financial return to the property owner than renting it out long-term. This obviously depends on how well the property is managed – what is the average rent per night and the occupancy in a given month as well as the additional expenses that come with short-term rent (housekeeping, amenities etc.)
Second, short-term rent provides increased flexibility to the property owner. By this we mean that the owner can block out a few days or weeks for his/her own use, for example, when family or friends are coming over for a visit. It also gives the property owner/manager an opportunity to see how the apartment looks on a more frequent basis and being more present allows to recognize and resolve any maintenance issues before they become real problems.
Finally, in our experience, short-term rent provides lower depreciation on the property and the furniture in it. In most cases, the guests are out of the apartment exploring the city and come back in the evening to watch some TV and go to bed, which decreases the over-use of some areas, furniture and appliances.
Should I manage on my own or find professional help?
If you really enjoy the process of communicating with guests and have one or two short-term rental properties, you might be fine with organizing everything on your own. However, if you don’t want to be disturbed during the night because of the WiFi being down, or if the guests lost their keys or your friend suddenly cannot make it to help you with the cleaning after guests and you’re stuck at work, it might be a good idea to hire professional help.
A short-term rental management company, such as CTRL Booking, can take all the hassle away from the process and as industry experts, we know exactly how to optimize the listings to attract the right guests and get you the best return. We offer full end-to-end property management that includes setting up and launching the property in the correct way (and there is a correct way!), communication with guests, organizing and performing professional housekeeping & maintenance, daily monitoring of pricing & occupancy, monthly financial reports and so on.
Contact us for more information.