The short term rental market has soared in recent years. Recent reports show that in the U.S. there are nearly 2 million professionally managed vacation rentals. There are likely countless others that are managed by the property owners themselves. Suffice it to say, if you’re considering investing in real estate to use as a short term rental, you’re in good company. But like most investments, you should know there are potential risks and rewards to becoming a rental property owner. Read on for what to know about buying and operating a short term rental property.
4 Things to Consider Before Buying a Short Term Rental Property
Before buying a short term rental property as an investment, there are several things you need to consider.
1. Does the Area Have Demand for Short Term or Vacation Rentals?
Before falling in love with a potential rental property, you should do your best to research demand in the area. What draws visitors to the area? In the case of Springfield and Eugene, OR there’s built-in demand from not only tens of thousands of students at the University of Oregon, but their family members and friends who will visit. Incidentally, tourism continues to increase in Oregon as well, with nearly 30 million visitors spending at least one night in Oregon each year.
2. Does the Property Allow for Short Term Rentals?
HOAs and Condo Associations can yield a great deal of power when it comes to how owners may use their properties. So before investing in a potential rental property, make sure you have confirmed that short term rentals are allowed. Some associations may prohibit short-term rentals but allow long-term rentals. Others may allow the property to be rented out for a certain number of weeks or months per year. Be sure you know exactly how you’ll be able to use the property before buying.
3. Who Will Manage the Property?
Before you buy a property to generate rental income, make sure you know how you will manage the property. Will you handle reservations yourself? Who will clean the property after guests leave? Who will be responsible for maintenance or any problems that arise while it is being rented.
4. How Much Do You Need to Earn on the Property?
If the reason you’re considering buying a property is to earn a profit, you’ll need to determine the right rental price, and the number of days each month it needs to be rented to make the property profitable. However, many people aren’t necessarily looking for a profit, but are instead looking to break even, while building equity in the property. If budgeting and projecting aren’t core strengths, work with your accountant to determine the bottom lines for breaking even or netting a profit.
Investing in Short Term Rental Properties: Is it Right for You?
Investing in real estate of any type has inherent risks. The best rental property investors take time to understand the risks, plan for contingencies, and understand that the process of becoming a successful real estate investor will be a marathon rather than a sprint. However, investing in real estate has allowed millions of people to increase their net worth, plan for a secure future, and see their dreams of a comfortable retirement come to fruition.
As long as you understand all the potential risks and are committed to putting in a significant amount of work, becoming a rental property owner may be right for you. But don’t go it alone. Assemble a team of experts to help you, including a local real estate broker, your financial advisor, and your accountant. With a team in place, you’re less likely to overlook potential pitfalls.
Work with a Local Real Estate Broker Who Specializes in Investment Properties
If you’re interested in learning more about properties for sale in Lane County that could generate rental income, contact Taylor Made Real Estate today. Founded by Xander Taylor, Taylor Made Real Estate is a boutique real estate agency serving the needs of investors, buyers, and sellers. Send us a message or call 541-729-3632 to learn more.