Short-Term Rentals & What To Look For In The Market

The market for short-term rentals has definitely increased within the last decade. It has become a new investment strategy for real estate investors. With the invention of platforms like Vrbo and Airbnb, traditional real estate investors have begun to see the benefits that can be had when investing in short-term real estate.

Why Invest in Short-Term Rentals?

First of all, it is possible to make a sizable profit from renting out an Airbnb on a nightly basis. It can far outweigh what an investor would get with a long-term rental. Secondly, investors of short-term rentals have more control over who will be staying in their homes and for how long. There are also risks that are associated with investing in short-term rentals. If you are looking for a short-term rental, there are some considerations to keep in mind.

Get to Know the Different Markets

If you are interested in investing in a short-term rental in Dallas, then you do well to know which market you desire to invest in. There are three types of potential markets for short-term rentals. They are the metro market, the national vacation market, and regional markets.

The Metro Market
The metro market includes major metropolitan areas. These would include big cities like Los Angeles, Las Vegas, or New York City. The metro market can be great for cash flow because there will always be guests coming and going, but it can also be risky. Hotel lobbyists and local homeowners can have a lot of pull when it comes to setting up anti-STR regulations, so do your homework on the neighborhood that you are interested in before investing.

The National Vacation Market
National vacation markets are found in areas that are dependent on tourism for their economy. This would be an area like Orlando, Florida; Honolulu, Hawaii; or Aspen, Colorado. Since short-term vacation rentals have been a part of the economic stability of these areas for decades, legal regulations are not really an issue. They could be a great investment. Keep in mind, this market is very susceptible to economic downturns.

Regional Vacation Markets
Regional vacation markets can be lucrative as well. These are areas where tourists can arrive in their cars. Even with the downturn of the economy, people still want to take vacations; they will just be more likely to take their vacation nearby. Real estate markets can be more affordable in these areas since they are usually in smaller towns. These areas also do not have as many regulation issues as do metro areas, but regional markets are highly susceptible to recession downturns.

Is Investing in a Short Term Rental For You?

Just like with any type of real estate investment, there are positives and negatives to investing in short-term rentals. Thousands of people have made great gains by investing in this type of market. Before you decide to get involved in short-term rental investing, investigate the market where you want to buy. Make sure that the investment has a potential for growth, and beware of local legislation issues. It is extremely possible to do well in short-term vacation rentals, you just have to do your homework.