Are short-term rentals a good idea? They can be, but there are a few things you should know first.
I’m getting a lot of calls this spring about short-term rentals. It’s a fantastic opportunity to make some extra income, and Arizona recently instituted a new law stating that municipalities and counties may not prohibit a property owner from doing a short-term rental.
However, there are a few things you need to consider before deciding if vacation rentals or short-term rentals under 30 days are right for you.
First, you can’t count every day as actual income. Because it’s similar to a hotel, people will come and go and there will be vacancies. Therefore, you need to plan for vacancies. Depending on where your short-term rental house is located, you may also encounter certain seasons that cause longer droughts. It’s important to be careful and budget appropriately for that.
Second, do you have someone who can manage the property? I have a lot of folks coming up from the Phoenix metro area who are thinking about buying in places like Sedona or Oak Creek Canyon. If this includes you, who’s going to handle the house for you while you’re 100 miles away in Phoenix?
Third, take into account the wear and tear on the property. The bigger the house, the more wear and tear it tends to absorb. Electing for a 2-bedroom, 1-bathroom condo might be smarter since you’re limiting occupancy. Details like whether you’ll allow smoking or pets also have to be finalized in your lease agreement.
Don’t forget about taxes, parking, and noise either, because these three things can be very impactful to you when you buy a short-term rental. Local municipalities will collect taxes from you since you’re running a business. Parking stipulations can vary from community to community. If your tenants like having a good time a little too much and go overboard with the noise, that could spell trouble for you.
Finally, be mindful of HOAs. Many homeowners associations prohibit short-term rentals of under 30 days, and state law can’t override them.
If you have any questions about whether a short-term rental is right for you or what areas you’d like to look in to purchase one, don’t hesitate to give me a call. I’d be happy to help you.