If you’ve ever thought about investing in a short-term rental property, there are a few key things to consider before doing so.
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How can you turn a vacation rental into an investment? Today, I’ve got a checklist of items of things you should keep in mind.
Personally, I love the idea of short-term rentals. I’ve stayed in some myself. However, being an owner of this kind of property is far different from staying in one.
The first thing you need to consider on your short-term rental checklist is whether you’re allowed by your HOA to use your property in that way. If your HOA isn’t an issue, you’ll still need to check for restrictions within your municipality.
In Coconino County here in Arizona, for example, you do need to register with the county as well as meet certain requirements. Common requirements include only allowing a certain number of occupants per bedroom as well as ensuring that there is parking available.
Being an owner of a short-term rental property is far different from staying in one.
You will also want to find out how long occupants can stay on your property. This number can vary a lot—with the maximum time ranging from as low as 30 days to as high as six months.
Next, figure out management. Are you going to manage from a distance? Who will do the turnkey? These are the sort of things that will need to be arranged to ensure that you don’t end up with bad reviews.
A bad review could ruin your investment. If you are going to be a hundred miles away, for example, you should know exactly who you can call if something goes wrong.
Whether it’s a leaky faucet in the middle of the night or a more serious repair, it is critical that you know who will take care of any issues that arise.
Another practicality that must be considered is taxes. Figuring out what this commitment will mean for you from the standpoint of taxes is going to be hugely important down the road.
Also, find out if you do need to register the property with a municipality. Since it is an investment property, not an owner-occupied one, there may be bed and board taxes to think about.
Finally, consider insurance. Your normal homeowner’s insurance isn’t going to work for this investment property. Some companies, however, will offer a kind of commercial coverage that may be better-suited to this kind of property.
If you have any other questions or would like more information, feel free to give me a call or send me an email. I look forward to hearing from you soon.