In recent years, short term rentals have become increasingly popular among travelers who are looking for a unique and affordable alternative to hotels. But did you know that short term rental properties can also be a great investment opportunity for property owners?
Why Short Term Rental Properties?
Investing in short term rental properties (STR) can provide higher rental income, flexibility, diversification, and potential for property appreciation, among other benefits
In this article, we will explore why investing in short term rental properties can be a good idea and provide you with tips for getting started.
So if you are considering investing in real estate, be sure to read on to learn more about the advantages of STR properties.
Now that you have a good idea on the reasons why investing in short term rentals is a good thing.
Let's dive a little deeper...
Here are 15 reasons why investing in short term rental properties can be a good idea:
1. Higher Rental Income:
They generate significantly higher rental income than long- and mid-term rentals. They also generate significantly higher rental income compared to long-term rentals due and here is why:
Higher nightly rates and more frequent turnover.
The ability to charge a premium for peak seasons, holidays, and special events also adds to the property's rental income potential.
With a well-managed short-term rental property, investors can achieve a higher cash flow, leading to a faster return on investment.
2. Flexibility
They offer more flexibility than long-term rentals, as you can choose to rent out your property only when you want to.
Additionally, they provide investors with flexibility and control over their investment. Why?
Unlike long-term rentals, investors have the option to rent out their property only when they want to, allowing for personal use of the property when it is not being rented out.
Investors also have the flexibility to choose between renting out the entire property or just a room, giving them more rental options and the potential for increased rental income.
3. Diversification:
Diversification is so important to keep your portfolio fresh & exciting. STR's offer investors the opportunity to diversify their real estate portfolio.
Investing in STR properties can provide diversification in your real estate portfolio, as they are a different asset class than long-term rentals.
They are a different asset class than long-term rentals, providing a different level of risk and return.
By diversifying their real estate portfolio, investors can reduce their overall risk and improve their chances of long-term success.
Investing in short-term rental properties offers investors the opportunity to diversify their real estate portfolio and reduce the risk of financial losses associated with long-term rentals.
As a different asset class, short-term rental properties provide an alternative investment option that can complement long-term rental investments, providing investors with a more balanced and diversified portfolio that can adapt to changing market conditions and increase the potential for long-term profitability.
4. Increased Occupancy:
Short term rental properties typically have higher occupancy rates, especially in popular tourist destinations.
Higher occupancy rates, especially in popular tourist destinations.
The high demand for rental properties in these areas allows investors to generate more rental income and achieve a higher return on investment.
Additionally, with shorter stays, there is less wear and tear on the property, reducing the need for repairs and maintenance.
5. Lower Risk of Damage:
They have a lower risk of damage since guests are only staying for a short period of time.
Lower risk of damage compared to long-term rentals.
This is because guests typically stay for a short period of time, which means there is less time for them to cause damage.
Additionally, they are usually well-maintained and cleaned regularly, which can help prevent damage. As a result, investing in STR's can be less risky than investing in long-term rentals.
6. Tax Benefits:
Investing in STR's, property owners can take advantage of tax deductions for expenses related to their properties, such as property taxes and maintenance costs.
Significant tax benefits. Property owners can deduct expenses related to their properties, such as property taxes, mortgage interest, insurance, repairs, and maintenance costs.
Additionally, property owners may be able to take advantage of depreciation deductions, which can offset rental income. These tax benefits can help property owners save money and generate a higher return on investment.
7. Property Appreciation:
Appreciate in value over time, providing a long-term return on investment.
Properties located in desirable areas with high demand for short-term rentals can experience significant appreciation.
As the property value increases, so does the potential rental income, allowing property owners to earn more money over time.
8. Potential for Capital Gains
If you sell your short term rental property for more than you bought it for, you can earn capital gains to reinvest via a 1031 exchange (how to build wealth with real estate)
If your STR is sold for more than its original purchase price, property owners can earn capital gains.
This can be a significant source of income and can be reinvested through a 1031 exchange.
Capital gains can also be used to pay down debt or invest in other properties.
9. Multiple Rental Options:
You can choose to rent out the entire property or just a room, giving you more rental options.
Choose to rent out the entire property or just a portion of it, such as a room or a guest house - this leaves tons of options!
This flexibility allows property owners to maximize their rental income and cater to different types of renters, including families, couples, and solo travelers.
10. Personal Use:
One of the great things about owning an STR is your ability to choose your options for personal use.
One of the benefits of owning a short-term investment property is the ability to use the property for personal vacations and getaways when it is not rented out.
This allows you to enjoy your investment property while also generating rental income to cover the costs of ownership.
11. Lower Tenant Turnover:
Tenant turnover is typically lower since guests are only staying for a short period of time. This is great for so many reasons, including...
Guests are only staying for a short period of time.
This means less time and money spent on advertising and screening tenants, as well as fewer vacancies to deal with.
12. Ability to Charge Premium Rates:
Premium rates during peak seasons, holidays, and special events.
With short-term rental properties, you have the ability to charge premium rates during peak seasons, holidays, and special events.
This can significantly increase your rental income and provide a boost to your cash flow.
13. Easy to Manage:
Short term rental properties are easier to manage than long-term rentals since you don't have to deal with the same tenant for an extended period of time.
Cleaning and maintenance can be scheduled between guests, and you have more control over who stays in your property.
You can hire someone to manage them from anywhere in the world.
14. Positive Cash Flow:
If you choose the right property in the right location, short term rental properties can generate positive cash flow.
With the right property in the right location, short-term rental properties can generate positive cash flow. Making finding the right location so important.
This means that the rental income generated by the property exceeds the costs of ownership, such as mortgage payments, property taxes, and maintenance expenses.
15. More Control:
With short term rental properties, you have more control over who stays in your property. Here are some of the awesome reasons why...
You can screen guests before they book.
This can help reduce the risk of damage to your property and ensure that your guests are respectful and responsible during their stay.
Additionally, you can choose when to rent out your property and for how long, giving you more control over your investment.
There you have it! Short term rental investment properties offer several advantages, including lower risk of damage, tax benefits, property appreciation, potential for capital gains, and multiple rental options.
These benefits can help property owners generate higher rental income, increase their return on investment, and build long-term wealth.
Are You Ready to Get Started in Investing in a Short Term Rental Property?
Overall, investing in short term rental properties can be a lucrative and rewarding venture, offering higher rental income, increased flexibility, and diversification in your real estate portfolio.
Additionally, the lower risk of damage, tax benefits, potential for property appreciation and capital gains, multiple rental options, personal use, lower tenant turnover, ability to charge premium rates, and easy management make it an attractive investment opportunity.
If you're interested in investing in short term rental properties in Nashville, consider reaching out to Rachel Mays.
As a knowledgeable and experienced real estate agent in the area, Rachel can provide valuable insight and assistance in finding the perfect short term rental property that suits your investment goals and budget.
Don't miss out on the chance to earn a positive cash flow and gain more control over your real estate investments with short term rentals in Nashville.
Contact Rachel Mays today to get started!
Rachel Mays is a Nashville Real Estate agent specializing in short term investment properties.
Check out RachelMaysRealtor.com for listings.
She loves to connect with her clients and give them the best opportunities to grow their portfolios'.
Rachel is fun-loving and kind, and a wonderful person to get to know for your Nashville real estate investment needs.