Renting out an investment property for short-term leases can be extremely profitable, particularly if the location is likely to be attractive to tourists or business people. However, although the financial rewards are usually much better than they are with long-term rentals, there are some important additional preparations to take.
1 – Insurance and Liability
A standard home owners insurance policy likely won’t allow you to rent out your property to holiday makers without invalidating any claims. However, having a suitable policy is essential, since there is a higher chance of damage occurring when you have multiple guests. Even more importantly, you could be held accountable for any accidents that might occur in your property when renting out, so you’ll need to have appropriate liability insurance to safeguard you from potentially costly legal action.
2 – Advertising
Advertising your property doesn’t have to cost anything, since the Internet affords plenty of free options that require no down payment and only take a commission from confirmed bookings. Among the most popular online advertising resources for property investors looking for vacationers are booking.com, airbnb.com and lastminute.com. You may also want to consider setting up your own website, particularly if you have multiple rental properties or offer any additional services.
3 – Cleaning and Maintenance
One of the bigger drawbacks of short-term rentals is that you’ll need to work hard to keep the property in pristine condition at all times. You will also need to be on-hand to check in new guests, take payments and exchange keys when they leave. If you also work full-time, then you’ll need to hire someone to help out with cleaning and check-ins, since flexibility and good time-keeping are essential for making your short-term rentals successful.
4 – Utility Bills and Deposits
Enormous utility bills present a common shock to owners of short-term rental properties. After all, many guests are not likely to care too much about putting the heating on maximum and leaving it on when they’re not home. Another issue is possible damage to the contents of the property that might not be worth making an insurance claim for. To safeguard yourself from damage, theft or excessive use of utilities, always insist on taking a cash deposit beforehand.
5 – Pricing
Pricing for holiday rentals can be complicated, since you will need to take a multitude of factors into account, such as location, size of the property and time of year. You may also need to adjust your rates on occasion in accordance with current tourism trends. You may also be able to get away with increasing your rates during public holidays and other major events. However, it is important to be as flexible as possible as well as be prepared to offer discounts for longer stays and repeat guests.
One of the main advantages of short-term property rentals is that, although there’s a higher risk involved, you don’t have to make any long-term commitment. If you think your investment property might offer enough potential for profitability in the tourism market, you don’t have much to lose by checking it out. Most importantly, ensure you have a suitable insurance policy in place to provide financial protection should the worst happen.