A short term rental is a property that is rented on an overnight basis rather than a 6 month or longer lease.
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.
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.
Buyer representation is 100% free to the buyer. Some brokerages charge a transaction fee from $250-$350, which covers the storage and processing of legal documents, but the agent commission is paid by the seller in a transaction.
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.
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.
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.
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.
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!
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.
Closing remotely is very common and is usually the most convenient way for buyers to close on their property.
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.