If you’re a homeowner ready to make a move, you may be thinking about using your current house as a rental property instead of selling it. As an investor, would you choose between longer-term tenants or higher turnover? A short-term rental (STR) is typically offered as an alternative to a hotel, and they’re an investment that’s gained popularity in recent years where as traditionally rentals have a lease term of one year and longer.
While a short-term rental can be a tempting idea, you may find the reality of being responsible for one difficult to take on. Here are some of the challenges you could face if you rent out your house instead of selling it.
A Short-Term Rental Comes with Responsibilities
Successfully managing your house as a short-term rental takes time and effort. You’ll have to juggle tasks like dealing with reservations, organizing check-ins, and tackling cleaning, landscape, and maintenance duties.
Short-term rentals experience high turnover rates, as new guests check in and out frequently. This home traffic can lead to increased wear and tear on your property—meaning you may need to make more frequent repairs or replace your furniture, fixtures, and appliances more often. This is not as much the case with long-term rentals.
Think through your ability and level of commitment, especially if you plan on using a short- term rental platform to advertise your listing. Most of them have specific requirements hosts must meet. An article from Bankrate explains:
"Managing a rental property can be time-consuming and challenging. Are you handy and able to make some repairs yourself? If not, do you have a network of affordable contractors you can reach out to in a pinch? Consider whether you want to take on the added responsibility of being a landlord, which means screening tenants and fielding issues, among other responsibilities, or paying for a third party to take care of things instead."
There’s a lot to consider before taking the leap and converting your house into a short-term rental. If you aren’t ready for the work it takes consider longer lease terms and selling.
Short-Term Rental Regulations
As the short-term rental industry continues to grow, regulations have increased. Legal restrictions commonly include limits on the number of vacation rentals in a particular location. This is especially true in larger cities and tourist destinations where there may be concerns about overcrowding or housing shortages for permanent residents. Restrictions may also apply to the type of property that can be used for rentals.
Many cities also require homeowners to obtain a license or permit before renting out short term rental properties. Nick Del Pego, CEO at Deckard Technologies, explains:
“Renting short-term rentals is considered a business by most local governments, and owners must comply with specific workplace regulations and business licensing rules established in their local communities.”
It is important to thoroughly check whether rentals, especially short-term, are regulated or prohibited by the local government and your homeowners association (HOA) before even considering renting out your home. To decide the better option between selling and renting your home, please contact us today.