Our Short term rental department is busy booking weekend and weekly winter rentals here at Stratton. The snow is better than out West this year and Stratton is an easy destination resort. Short term rentals can also provide extra income to an owner. Please enjoy the article below shared by Ashley Halligan, a property manager software analyst for Software Advice. For information on availability on any of our rentals, please call Tara or Katie in our rental office.
Risks and Rewards of Short-Term Rentals | A Starter Guide for Property Owners
With the growing popularity of short-term rentals, they're becoming all the frenzy in the property management market - both for second-home owners and property management groups with a vast portfolio of rentals. The income potential is one of the most obvious and attractive catalysts to dive into the market. But there's a handful of both risks and rewards that should be carefully weighed before converting conventional, long-term rentals into short-term rentals or before investing in a property solely for this use. In a detailed guide for property managers outlining four risks and four rewards of this market, we've created a launching point into the necessary research that should be done before diving in head first.
Some of the controversy surrounding short-term rentals stems from both hotels and city departments. Hotels argue that property owners renting on a short-term basis should be subject to the same occupancy taxes that they have to pay as an operative business. City officials make the same claims, suggesting that if short-term rentals are allowed, the city should gain the revenue from the HOT (hotel occupancy tax). Because of the ongoing debate, some cities have banned short-term rentals altogether. Others have implemented restrictions. As a property owner considering this type of rental, keeping this in mind is crucial; if restrictions or bans are enforced, will you become subject to a financial loss? Other risk factors mentioned in the guide include the additional costs associated with short-term rentals, competition between other properties and community risks.
The most obvious reward is the revenue potential, with some property owners claiming they can earn 25% of their monthly mortgage payment in a single night; factor in the opportunity to charge significantly higher rates during peak periods in your geographic area (highly attended events or festivals, holiday weekends and summer weeks, for example), and the opportunity to make significantly more than a conventional, leased rental is high. That said, this should be balanced with the aforementioned additional costs to truly calculate profit potential. Some property owners rent on a short-term basis as a way to preserve a property, claiming short-term renters are easier on a property and allows the owner more access for upkeep and maintenance. Other rewards that may surround these rentals include the community rewards - like promoting tourism, and tax breaks for maintenance, marketing and large-ticket purchases.
No matter which reward has attracted you to potentially managing these property types, it's important to gauge all possible outcomes and make the best decision based on your property type, its location and all the possibilities that may be potential rewards or hindrances.