Question 1

What is a short-term rental?

Accepted Answer

A short term rental is a property that is rented on an overnight basis rather than a 6 month or longer lease.

Question 2

Where do I start?

Accepted Answer

If you’re reading this post, you’ve already started researching. The next step is to find an experienced Realtor to help you through the process of acquiring your short term rental investment.

Question 3

How do I know which realtor to choose?

Accepted Answer

The decision to work with an agent should be based on their experience, competency, and understanding of the type of investment you are looking to make. An agent that primarily sells primary homes may not make the best agent to help you acquire a short term rental investment. Don’t be afraid to ask an agent how many investment properties they sold last year to gauge their experience level. If they only sold a few properties, there is probably a reason. In addition, beware of Realtors who are also property managers, as this presents a significant conflict of interest to you as the buyer.

Question 4

How many agents should I work with?

Accepted Answer

Choose one agent that is the best fit for you. It is counter-productive to work with various agents. All Realtors have access to the same properties on the MLS and any agent can show you any listed property. Your agent choice should be based on experience, competency, and communication.

Question 5

Buying a property sight unseen:

Accepted Answer

Should I do this? Vacation and short term rental property markets can move very quickly, and properties can sometimes sell within hours of hitting the market. Other times, the property is not available for showings due to rental schedule, and is sold before any realtor can gain access to show it. This is where you will have to rely heavily on your Realtor’s expertise and knowledge of the market. The vast majority of our clients complete the entire investment property buying process remotely, from offer to close. We provide video walk-through if access is available, and are brutally honest with our clients on whether a property will provide adequate cash-flow to warrant a sight-unseen offer.

Question 6

What is self-management?

Accepted Answer

Many new investors mistakenly believe that if they live in a different state, then they will need to utilize a local property management company to manage their short-term rental. This is the biggest misconception in short-term rental investing. Property managers can charge anywhere from 20-40% of gross revenue. With the help of technology, short-term rental investors can circumvent the old system and keep 100% of their revenue rather than just a fraction. Self-management is the act of managing your own bookings on the major short-term rental booking platforms such as Airbnb, Homeaway, and TripAdvisor, with the help of a few local boots on the ground in the form of cleaners and handymen. We supply all of our clients with references to local cleaners, handymen, contractors, and other qualified tradespeople to make successful self-management a fully attainable goal from any location in the world.

Question 7

Rental History

Accepted Answer

Many buyers’ first question when a property piques their interest is to ask to see the past rental history. The number one rule in vacation rental investing is this: PAST PERFORMANCE IS NOT AN INDICATOR OF FUTURE POTENTIAL. Many short term and vacation rental property management companies are mom and pop operations that do not fully utilize all of the technology that is available, and quite often achieve significantly lower rental numbers than what the property could bring in if self-managed. It is more important to be concerned with what a property can achieve under the RIGHT circumstances. This is where we add significant value to our clients by giving them the tools to create the right circumstances for a property to reach its full potential with the help of our partners and associates. We also have an Airbnb consultant on staff that is available to all of our clients free of charge to answer questions on setting up listings, guest troubleshooting, and booking questions.

Question 8

If I buy a property with future bookings, will I get to keep those bookings?

Accepted Answer

If you choose to stay with the current property manager, you will be able to keep the bookings. If you will be self-managing, the property manager will keep those bookings and move them to other properties on their management program. If you are buying from a self-manager, usually the seller will send the link to your new Airbnb or Homeaway listing to the future guests so that they can cancel their booking with the seller and rebook their trip with you. The bottom line is, don’t worry about the seller’s future bookings, we will help you get started and booking immediately after closing!

Question 9

Short-Term Rental Regulations

Accepted Answer

Short-term rental regulations vary by city, so you will need to do due diligence to understand the laws and how they will affect your investment. True vacation rental markets make fantastic short-term rental investments because they will be the most short-term rental friendly, with little likelihood of imposing any anti-short-term rental regulations in the future.

Question 10

Do I have to close in person?

Accepted Answer

Closing remotely is very common and is usually the most convenient way for buyers to close on their property.

Question 11

Will the properties come furnished?

Accepted Answer

Good news! Most vacation rentals (with the exception of some new construction properties) will come furnished, so you will likely not have the added up-front cost of furnishing your property.

Question 12

Are short-term rentals a good investment?

Accepted Answer

Short term rentals are a great investment because they allow investors to maximize income on a single family property. They can gross anywhere from 2 to 10 times as much as a comparable traditional long term rental.

Question 13

How do you invest in short-term rentals?

Accepted Answer

It’s pretty easy to invest in short term rentals. Do some research and take some time to decide which market you’d like to invest in. Make sure that the local regulations are favorable for short term rentals, check out what the average occupancy and gross annual income for properties in your price range might be, find an agent, and pull the trigger!

Question 14

Is short-term rental profitable?

Accepted Answer

If you buy in the right market and manage the property correctly, short term rentals are arguably the most profitable type of real estate investment.

Question 15

Are rental cabins a good investment?

Accepted Answer

Rental cabins in the Smoky Mountains are a great investment. 13 million tourists a year visit the Smoky Mountains, and there is very little hotel presence. All of those tourists are staying in short term rental cabins.

Question 16

Do vacation rentals pay for themselves?

Accepted Answer

Vacation rentals can do much better than merely paying for themselves. They can provide an entire extra income stream for any level of real estate investor.

Question 17

How do vacation rental homes make money?

Accepted Answer

Vacation rentals make money through tourists renting them to stay in during their vacations. Generally speaking, the more popular the tourist area, the more opportunity for profitable short term rental investments.

Question 18

Is a beach rental a good investment?

Accepted Answer

Beach rentals can be hugely profitable short term rental investments, especially along the Gulf Coast of the United States. Millions of tourists visit the Emerald Coast and Gulf Shores area each year for vacation, and there are very few hotel chains. The vast majority of these tourists stay in short term rental properties, and have for decades.

Question 19

Are short-term rentals allowed?

Accepted Answer

Restrictions on short term rentals will vary depending on the market. Metropolitan markets tend to have much stricter regulations than tourism dependent vacation markets. Be sure to check regulations at the state, local, and HOA level before purchasing a short term rental.

Question 20

What qualifies as a short-term rental?

Accepted Answer

A short-term rental is a unit (often an apartment or vacation home) that is rented for less than 31 consecutive days.

Question 21

How do I start a short-term rental business?

Accepted Answer

The first thing you’ll need to do is to determine the market in which you want to invest. Then, you’ll need to review any local short term rental laws. Third, you’ll need to analyze the potential income for short term rentals in your chosen market. Lastly, employ the expertise of a local real estate agent who is well versed in short term rental investing to help you find the perfect property.

Question 22

Can my vacation rental investments go down in value over time?

Accepted Answer

No one can predict the future, however, the real estate market as a whole tends to appreciate on an upward trend in the long term.

Question 23

Do short-term rentals require special insurance?

Accepted Answer

Yes. Short term rentals require insurance. There are several ways to go about short term rental insurance. Many owners use one of two types of insurance, or a combination of both: a short term rental specific insurance policy, or a commercial umbrella policy. Always discuss all potential policies with your insurance professional in order to choose the policy that will best fit your needs.

Question 24

What is a short-term rental property?

Accepted Answer

A short-term rental property is a unit that is rented for less than 31 consecutive days.

Question 25

How do I start a short-term rental?

Accepted Answer

Identify your market, check the regulations, analyze the returns in that market, put together your team (real estate agent, lender, and property manager if you’re using one), furnish and decorate, learn the platforms on which you will be renting the property, and list!

Question 26

How do I evaluate a short-term rental?

Accepted Answer

We recommend using a combination of the short term rental specific data subscriptions (for example, Airdna) and the ENEMY method. The ENEMY method involves analyzing the neighboring properties on the major booking platforms to get an idea of average price per night, occupancy rate, cleaning fees, and evaluate how your listing can potentially outperform your neighbors.

Question 27

How do you invest in short-term rentals?

Accepted Answer

The same way you invest in almost anything. Save up a down payment, identify the property that you would like to purchase, and purchase it.

Question 28

Should I invest in a vacation rental?

Accepted Answer

Vacation rentals can be a very lucrative addition to any real estate investment portfolio. They can act as cash flow turbochargers that allow you to scale your portfolio more quickly than if you invest solely in long term rental property.

Question 29

How can I increase my vacation rental income?

Accepted Answer

Sleeping capacity is the greatest driver of income. However, the addition of amenities like a hot tub, pool table, or remote work space can attract more renters and increase income.

Question 30

Is beach house a good investment?

Accepted Answer

Beach rentals are a great investment. You’ll generate rental income while also having a beach home for personal vacations.

Question 31

Where are the cheapest beach houses?

Accepted Answer

Panama City Beach offers some of the lowest real estate prices on the entire coast of Florida. Gulf Shores, AL also offers very affordable beach properties.

Question 32

Where is the best place to buy a vacation home?

Accepted Answer

Regional, drivable vacation markets generally have the highest tourist traffic, the friendliest short term rental regulations, and are the most recession resistant.

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