If you are going on vacation for few months or so, consider earning passive income by renting your property for a short while. Tap into a short-term real estate investment plan to make quick cash. Many homeowners discount the idea of renting their home while being away to prevent property damage or/and misconduct by temporary tenants. However, with the expansion of the short-term rental industry it has become extremely profitable for a homeowner to take advantage of Airbnb and rent the house for a short duration of time.
Forget about the negative talk you hear regarding short term rental horror stories, the flip side is you can make lots of money with little work required. That extra money can be used to fund your vacation or pay off your rent or mortgage payment if you are travelling abroad or away from home for few months. The idea itself just makes sense since it has become simpler and easier than ever before. The fact that the renting industry has evolved into two main branches (short-term and long-term rentals) has given property owners more options to tap into the real estate industry and reap the benefits in return.
When it comes to renting your property, it is a decision that has to be studied thoroughly. The main reason behind renting your property is of course making more money, which means that making a study on the profitability of the idea is the first step. There is no point of going through the risk of hosting bad tenants that might damage your property if there is no major profit to be made.
4 Reasons for Renting Your Property While Being Away
The Location is Attractive
Location is the first factor to take into account when it comes to renting out your property short term. Some locations are extremely attractive for renters and tourists alike to be rented out for a number of months. Other locations are just bad business and frankly speaking, just a headache if they are rented out. Compare two properties, one in New York City and the other in Jefferson City, Missouri. The New York property’s location makes it easy for the homeowner to decide on renting it out. The average rental income in New York is extremely high compared to that in Jefferson City, which means that profit from renting the New York property is inevitable. There is also the demand factor involved depending on the location; attractive locations reap higher demand for rental properties.
Related: What Is Location in Real Estate Investing?
The Rise of the Airbnb Industry
Short-term rentals have become the next big thing in the real estate industry with many opportunities to make killer profit in a small duration of time. Short-term rentals such as Airbnb have become direct competitors of the hotel industry while at the same time tapping into the real estate market. The fact that Airbnb is accessible online for anyone makes it all the more popular for homeowners and guests alike. This makes renting your property on Airbnb for the time you are away on vacation a profitable investment strategy.
Some find it challenging to manage a high tenant turnover for an Airbnb listed property while being far away, but fret not because there is a way to go around it. The demand on Airbnb properties is high, and this makes it easier for owners to find someone who is prepared to rent the property for 2-3 weeks (or more) depending on the nature of the guest’s visit. If that is not the case, the owner can leave a set of keys with a friend or relative who can take care of the preparations of the property for new tenants. If none of those options work for the owner, then property management is a good option, which offers great value for money.
The fact of the matter is that many people who go away on vacation or work for a few months abroad have become accustomed to the idea of putting their property on Airbnb. Why you might ask? because it is just too good to turn down in terms of profitability. If an owner is leaving for 2 months and has a booking total on Airbnb for 40 days, with a rental rate of $80 per day for a 2 bedroom property, this means the owner will be making $3,200 in two months. Is it worth it? The answer without a doubt is yes. If you are still skeptical, check out Mashvisor for Airbnb listings to get a better feel of rental income potential and occupancy rates in your area.
Related: 6 Reasons To Switch From Traditional to Short-Term Investment Properties
Deposits and Security Made Easier
Renting your property if you are leaving doesn’t mean there has to be any risk on your property and personal belongings. All tenants around the world now understand that paying deposits for property owners is a prerequisite in order to be able to rent any listed property. It is part of any agreement between a tenant and an owner, which will ensure that the tenant will compensate for any damages made by tenants to the property. Having this deposit should make it easier for you to consider renting your property without any fear over what the tenant might do. The deposit is now a necessary condition in any Airbnb transaction to give home owners a sense of reassurance, similar to traditional rentals.
Another way to look at renting your property when you are away, you reduce the risk of any thefts and burglary to your property. Burglars are normally thwarted off when they notice that a property is inhabited compared to a property that has been empty for months. The security part about putting your property for rent is definitely worth considering.
Using the Profit to Pay Off Expenses
Renting your property can be most beneficial to property owners who have many expenses to pay off. For example, if you own a property that has a mortgage payment, utility expenses and insurance; it makes sense to rent it out in order to receive profit that will cover those expenses at the very least. Why pay the cost of these expenses when you have an empty house that can reduce them significantly?
Related: Paying Off Investment Property Mortgage Early: Pros, Cons, Tips
There are many reasons to make you think seriously about renting your property when you are not occupying it for few months. For every owner, those reasons will defer in one-way or the other, but the overall gain far exceeds the cost of renting to reliable tenants. Moreover, given that the real estate industry is a booming market, renting your property for profit should definitely be a serious consideration.