RENT OWN SELL
Newyork
RENT OWN SELL
Newyork
Thinking of renting out your space but tired of traditional year-long leases? STRs, or Short-Term Rentals, might be the key! From beach bungalows to cozy city apartments, this booming trend is redefining hospitality and offering exciting opportunities for property owners. Ready to learn how STRs work, discover the benefits, and unlock a new income stream? Let’s dive in!
STR stands for Short-Term Rental real estate. These are properties rented out for stays typically less than 30 days, often on platforms like Airbnb and VRBO. They can be entire homes, apartments, or even spare rooms, and offer potentially higher income than traditional rentals but also require more management and upkeep.
The main difference between an STR and LTR is the income stream. When you rent out a property long-term (LTR), the rental income is more reliable. This is because tenants usually sign a 12-month lease, providing a steady flow of money. For instance, if the monthly rent is $1,500, a long-term rental guarantees $18,000 throughout a year.
On the other hand, short-term rental (STR) income tends to fluctuate. This variation stems from factors like changing Average Daily Rate (ADR). As of 2021, listings rented out full-time earned an average annual revenue of $56,000. But this amount can be higher or lower depending on the specific circumstances.
As already mentioned above, short-term rentals are typically rented for 30 days or less, catering to temporary stays, while long-term rentals commonly have lease terms of months, often extending up to a year or more, providing stable occupancy.
Short-Term Rentals often come fully furnished with hotel-like amenities such as toiletries and towels, aiming to enhance guest experiences. In contrast, Long-Term Rentals are typically unfurnished, allowing tenants to personalize the space, though basic appliances may be included.
Short-term rental investors must comply with local Airbnb rules and regulations, which may include strict regulations on vacation rental operations. Long-term rental owners need to adhere to landlord-tenant laws at the state level, along with city ordinances concerning building, health, and safety codes.
Short-Term Rental owners target leisure or business travelers and temporary visitors, while Long-Term Rental owners cater to long-term residents without their own housing.
Potentially Higher Income: STRs offer the possibility of earning significantly more rent compared to LTRs, especially during peak seasons or in high-demand areas. You can adjust nightly rates to maximize income based on market trends.
Flexibility: With STRs, you have more control over your property. You can choose when to rent it out and for how long. This can be ideal if you plan to use the property yourself occasionally or want to keep it vacant during specific times.
Faster Turnover: If a guest cancels or you need the property for yourself, you can quickly re-rent it to new guests with minimal downtime. This can help manage unexpected situations.
Diversification: Owning an STR can be a way to diversify your income stream and potentially mitigate the risk associated with traditional real estate investments.
Building a Brand: If you enjoy hospitality and take pride in offering a great guest experience, you can build a brand around your STR. This can be a rewarding way to connect with people and create a unique vacation rental business.
More Management: STRs require more active management compared to LTRs. You’ll be responsible for cleaning, guest communication, and potential turnover between renters.
Potential for Vacancy: STRs might have periods with no bookings, leading to income gaps. This risk can be mitigated by strategic pricing and effective marketing.
Local Regulations: Some areas have restrictions on STRs, including limitations on rental days or licensing requirements. Always check local regulations before you invest.
Investing in Short-Term Rental (STR) real estate involves several key steps:
While traditional real estate platforms work, finding STR properties often involves niche vacation rental marketplaces, STR-focused agents, or data-driven platforms like AirDNA that highlight high-demand rental markets.
An STR can be a good first investment for hands-on individuals comfortable with some risk. It offers potentially higher returns but requires active management and research on local regulations.
As per AIRDNA, these are the 10 best places for STR Real Estate in 2024:
Profit on STRs is variable, but factors like location, occupancy rate, and nightly rate can influence potential earnings. AIRDNA suggests annual averages of around $56,000, but remember to factor in expenses and vacancy periods for a realistic picture.
STRs are ideal if you crave higher potential income, enjoy the hospitality, and have the time to manage guests, but consider your tolerance for vacancy periods and local regulations before diving in.
Related Article:
How to Find Short Term Rentals in NYC
Short Term Leases VS. Long Term Leases
