Investing in Short Term Rentals

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The greatest  risk when investing in real estate is a reduction in the value of an asset over time, and decrease in rents in the future. In addition, running costs, booking commissions, cleaning and maintenance expenses can all reduce your income from the property, particularly during slow periods with high vacancies.

Yet research has shown that the average holiday rental property returns more than double the gross rental income of a bought property for long-term rent.

So how can you choose the correct property and enjoy the financial benefits of this new trend in real estate?

Here are some helpful tips to make a good vacation property investment for a considerable passive income:

  1. Find a good real estate agent. Brokers will know about listings that aren’t yet on the market and can let you know about key properties before the listing go public. The best brokers should immediately be able to show you at least 3 suitable properties available in the area, also, should have at least one property recently sold at the same place.
  2. Make sure you check local regulations. You need to research local, municipal and regional laws, regulations,  license requirements and taxation are for short-term renting in the area. You should check the governing rules, also, find out  what the building rental rules are (e.g. daily, weekly, monthly quarterly, three times a year, every six months, annual). When buying a house, people are also buying a lifestyle; they don’t expect to have strangers around all the time and get new «neighbors», every day, week, month or year. Breaking the rules, could make your life -and the lives of your guests- a nightmare.
  3.  Set your budget. Taking into account the expenses related to the new home, such as taxes and utility bills. Remember you always have to pay, whether your house is rent or not.
  4. Location, location, location! The rule is paramount. The property you invest in as a short-term rental should be within walking distance of local shops, business centers, public transportation nodes, and should also be close to major local tourist attractions, archaeological sites or the beach.

5.Have realistic expectations. Do not let trivial things-such as unimportant things, such as, dirty wallpaper, the colors of the rooms, or old-fashioned cabinets and closets put you off. These are things that can be easily changed.

You need to see what the State Laws rules, license requirements and taxation are for short-term renting in the place.

6. Offer privacy. A good way to set your short-term rental property apart in this competitive market is to offer your tenants privacy. A separate private entrance can be a key selling point for the property.

Once you’ve checked the all applicable laws and regulations, found the right property, and brought it up to your standard, the next step is securing occupancy. Aim for steady demand and longer stays to gain the most return from your investment.

source: BUSINESS PARTNERS | SEPTEMBER-OCTOBER 2018

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