Can Short Term Rentals Really Work for My Property?
I meet someone almost every day who has thought about getting into short-term rentals, but they are unsure where to start. They share doubts such as “I don't live in a vacation destination, would it still work” or “How much will it cost to furnish and run it? Is it really worth my time?” These are common concerns preventing smart investors from getting into the short-term rental game.
Don't let those concerns stand in your way!
Opening and operating a BnB takes hard work, but doesn’t have to be hard. And here's a little secret. Bnb hosts do not even have to own the property to get the monthly cash flow. I love working with landlords to make a win-win situation for myself as the Host and for them.
There are three different types of Short Term Rental hosting: ownership, arbitrage, and co-hosting.
The ownership model is the most popular and straightforward method. People own a property and rent it out on a short term basis. However, these other two methods utilizing other people’s properties are taking the industry by storm.
In both arbitrage and co-hosting, an investor approaches a landlord about using their home as a short term rental. There are many reasons why it is good for a landlord to work with a short term rental investor. My favorite three are:
● They have the property professionally cleaned multiple times per week (if you are a landlord, you know that doesn’t happen with your typical renter!).
● The Host is reviewed (hopefully 5-star reviews) every single week on how clean they are keeping the property.
● Once the Tenant puts furniture in a home, he/she hopes to be there until the landlord wants to sell—and usually hopes to be their buyer!
It is advantageous as the Host to use other people’s properties because it does not require a large down payment which allows you to scale faster. Additionally, if a major appliance item or structural part of the home fails, it is the landlord’s responsibility. I truly believe that it is a win-win situation for both parties.
With the arbitrage model, the Host signs a standard annual lease with a fixed monthly rent. The Host then rents it out on a short term basis with the landlord’s permission.
With Co-hosting, the Host is similar to a long term property manager. The Host is paid a percentage of the revenue from the property. Depending on how involved the landlord wants to be, short term property management can range from 10-50%, with 25% being the norm.
No matter which of the three types of ownership you plan to use, make sure the local laws and regulations do not prohibit short term rentals.
If an individual puts proper systems in place and is willing to work smarter, not harder, then they are going to love this investment!
I am so grateful to be in an industry that I love that allows me to be both a mom and real estate investor.
MeiLani coaches individuals, corporations, and large audiences on how to Stop Dreaming and Start Doing as well as how to launch and scale their own Airbnb Hosting business. Visit www.whynotmeacademy.com or listen to her podcast “Why NOT Me? Academy”.