Capitalizing on the Short-Term Rental Investment Boom

Investing in a short-term rental comes with numerous perks, like higher income and easy upkeep, and it doubles as a vacation home for yourself. Since this market is rapidly expanding and the demand is increasing, you should make the most of this financial opportunity. Learn more about capitalizing on the short-term rental investment boom with this essential guide.

Key Takeaways

• An upward trend of promising growth in the short-term rental market makes it an excellent option for generating passive income for years to come.
• Optimizing your vacation home’s location is imperative because short-term rentals rely on tourism and seasonal travel.
• Travelers prioritize flexibility and ample accommodations when booking their vacation as they might need to work remotely, stay longer, or bring the whole family on their trip.
• Appeal to a broader audience by providing unique home features or updated amenities that inspire travelers to book your short-term rental.
• Keep up with the digital world and use technology tools to your advantage to help you search for rentals and manage your properties.
• Seeking education on short-term rental investing and the best tricks to apply toward it betters your chances of achieving financial freedom.

Why Is the Short-Term Rental Market Growing?

Over the past five years, the short-term rental market has seen a significant jump in loan volume of nearly 3,000%. The COVID-19 pandemic further fueled this growth as people began to adopt new lifestyle changes. People now prioritize travel over work, adding more value to taking vacations. Studies show that the majority of travelers prefer to stay in a short-term rental because it provides the added comforts of home, unlike a hotel. The short-term rental market also seems recession-proof, with an estimated compound annual growth of 8.49% through 2026.

How To Capitalize on the Short-Term Rental Investment Boom

Investing in a short-term rental is a promising method of creating passive income, as this market shows no signs of stopping. Now is an opportune time to learn more about this financial asset and join the upward-moving trend. Here are some ways to capitalize on the short-term rental investment boom to maximize your revenue potential:

Purchase a Rental in a Desirable Location

The best way to ensure success with your short-term rental, also called a vacation rental, is to purchase in desirable locations. When you are ready to invest, keep in mind that vacation homes thrive on seasonality and tourism. Today’s travelers want to visit a place where they can enjoy the outdoors or famous theme parks. For nature-based experiences, the top three destinations are near beaches, mountains, and lakes. Travelers who want to explore a major city or visit an exciting attraction often opt for a rental location close to stores, restaurants, and museums.

On the other hand, because of the COVID-19 pandemic, remote work has become a new trend. As the pandemic subsides, working from home has not, increasing the likelihood of people wishing to travel and work simultaneously. There’s a slight chance that purchasing a short-term rental in a safe and secluded area will have more appeal than a home in a busy city. Remote employees aim to have a better balance between work and play, so finding a rental that meets those needs might be profitable.

Cater to the Flex Living Appeal

Providing your guests with flexibility for their short-term rental stay is key to maximizing your investment. Travelers are more prone to booking a reservation with you if you offer flexible daily, weekly, or monthly leases. They also prioritize staying in a rental that presents a versatile space, all in a home-like setting. 

Consider investing in a short-term rental with separate office space for remote workers or ample living spaces like a kitchen and living room with updated appliances for added convenience and entertainment. For many travelers, amenities matter and can drive their decision to select a rental that meets their needs. Electronic amenities such as a dependable Wi-Fi connection or a smart-home system to control the lights and thermostat are popular must-haves for guests.

Provide Group Travel Accommodations

Another way to capitalize on the short-term rental investment boom is to choose a home with more than one bedroom to accommodate group travel. The most common types of trips people take involve a small family consisting of a couple and their children or a large group of multiple families, friends, or couples. By offering a spacious home with several bedrooms, you expand your range of renters.

Because of the increased interest in traveling as a group, short-term rentals have grown in popularity for their ability to house several people, allowing plenty of personal space. Configure more sleeping arrangements by adding a sofa bed or bunk bed to one or more of the bedrooms.

Offer Something Unique

Generating good income from a vacation rental can go beyond the location, nearby attractions, and in-home amenities. If your property boasts something unique, you increase your chances of booking reservations year-round, despite the season. Most guests appreciate a vacation home with something interesting that adds to the appeal of traveling. 

Consider a home with an indoor fireplace or outdoor fire pit. To appeal to nature lovers, adding on a patio, sundeck, or balcony will entice them to reserve your short-term rental. Choose a property with a heated pool or Jacuzzi for better success in the winter. You can also choose to decorate your home with a theme that breaks from the monotony of a hotel room and provides a cozy cabin or vibrant art gallery feel. Some travelers appreciate simpler features such as a laundry room, free parking, or a gym to enjoy the comforts of home away from home.

Be an Early Adopter of Technology Tools

As the short-term rental market grows, so does the software available to find and manage properties. Remain open-minded and eager to adopt property technology tools, known as proptech, to improve how you conduct business in the real estate market. These technologies help you stay organized, especially if you plan on owning more than one rental property. Navigating this market can be challenging, but these management tools can help you significantly.

Financial technology companies like Nectar offer investors opportunities to browse and purchase properties that develop a steady cash flow. Mobile applications like Vrbo and Airbnb are great options for posting your vacation rental, gaining payment protection, and providing flexibility for you and your guests. Other apps promote convenience by allowing you to schedule maintenance, communicate with guests, and change rental prices with ease.

Factors To Consider Before Investing in a Short-Term Rental

While short-term rentals are a sound investment, it is important to consider the potential risks. Think about your budget and the startup costs before purchasing your rental property. Owners are expected to fully furnish a vacation home and provide up-to-date appliances. Adding unique features increases the initial investment cost but can help you profit sooner. 

Short-term rentals often have vacancies due to a lack of desire from guests to travel during the week or outside of the holiday season. Be sure to plan accordingly for the slow times and expect fluctuations in income. Investors also need to learn about the local laws and regulations in order to comply with what is expected from them and their properties. Despite the possible downsides of venturing into the short-term rental market, the best practice is to educate yourself before investing.

Real Estate Education Is Essential to Your Success

If you want to capitalize on the growing short-term rental market, choose Infinity Investing for the finest real estate education. Our team of business experts strives to enhance your financial literacy and guide you on your path to financial freedom. Sign up for our 360 Pro membership for the ultimate guide to creating long-term wealth. The 360 Pro membership features workshops, training videos, weekly meetings, portfolio analysis, and exclusive access to investment properties. There is also an available stock market investing sector for those interested in expanding their investment portfolio.

Lifestyles and priorities are changing. People want to travel, and the demand for vacation rentals is expanding. Now is the time to take advantage of the short-term rental investment boom. You are capable of generating lifelong passive income, and we look forward to helping you along the way.