Short-term rentals (STRs) are the talk of the town in the real estate community.
Understandably, this strategy turns the heads of investors with the appeal of higher returns and the allure of owning a vacation property that you can access at your leisure in a market you love. STRs are especially interesting in our current market because rapid inflation and rising interest rates have made buying into cash flow using a traditional real estate investment model difficult.
I’m not saying those properties don’t exist, but in markets like Denver, they are almost impossible to find. For similar high-demand markets, the increased prices on top of higher interest rates don’t compute an immediate return on investment with a traditional lease.
This is especially true for new investors and those of us searching for financial freedom through real estate. Seasoned investors with capital and steady incomes have the luxury of investing in assets that simply break even or take an initial loss, knowing that the property value and rents will appreciate and see a future return. For those of us looking for a return on investment as soon as possible, we have limited options in today’s market.
As a short-term rental investor, I analyze properties daily for my STR management business. I know there are home-run opportunities for short-term rentals, but it is not for everyone! STRs have more inherent risks, and the business model is more hands-on than a long-term rental.
But this investment strategy is a viable solution if you are searching for an immediate return in today’s market. I’m proclaiming this with the caveat that you must know what you are doing when it comes to short-term rentals.
To help you understand if short-term rentals are the next investment for you, I’ve outlined four areas that you must have crystal-clear clarity on before you take the leap and start a short-term rental.
1. Know Your Numbers
Like a traditional real estate investment, it’s all…