As interest rates have increased, we are seeing more investors consider this space because it helps offset higher mortgage payments and carrying costs. As they do that, we start to see an increase in supply, but not necessarily demand. So, make sure you really know your market. You also need to have a strong knowledge base of your local hotels, their pricing, amenities, availability and clientele. Recently, there has been a lot of chatter about STRs to offset increased carrying costs mainly attributed to higher rates. I think that has given an illusion of profitability and ease for any property and that is just not true. These types of rentals serve a great purpose and have amazing demand - for the right property - in the right area - with the right amenities - at the right price. The risks are higher due to the cost of furnishing, utilities and vacancy, so do your homework!
Click here to read Jason’s full case study with a real short- term rental to learn how he calculates whether a property should be converted to an STR.
VALUE-ADD STRATEGY I always say sometimes investors are just too tight with money! I fully understand the purpose of an investment, but there is an old saying, “It takes money to make money.” That is very true when it comes to investing in these particular types of properties.
Here are some easy value-add ideas that can help beat out your competition:
Add an EV charger (there are some tax credits, too). Search around your subject property area and see how many properties have EV chargers.
Add a pull-out sofa. Our pull-out sofa was a $400 upcharge, yet we can host two additional guests and we charge for those guests each time.
Add a used video gaming system. We spent $300 and bought a used PlayStation 4 with a few games. Our last guest said their kids loved it.
Add something unique but affordable. We added a heated toilet seat, heated towel bar and some great deck lighting to make the entertaining space more appealing.
Upgrade your linens and mattresses. Nothing like a guest having a bad sleep and leaving a cranky review.
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