Short-term rentals (STR), such as those through Airbnb and VRBO are gaining significant traction in the rental investment market, and according to Homerun Offer CEO Ryan Pineda on Forbes, early adoption of this emerging market could maximize your return.
Overall, Americans are recognizing the benefit of investing in real estate, including single family rentals and STR. According to a Gallup poll, it’s real estate, not stocks, that are considered to be the best investment. The poll indicates that 35% of Americans believe real estate to be the superior long-term financial investment, compared to 27% who say stocks are the better investment.
According to Pineda, the biggest benefits of STR investments are higher returns, personal use, and diversified risk. In the right market, short-term rentals are producing much higher returns than traditional rental investments. Even with higher management fees considered, the net is usually going to be higher than if you rented the unit long-term.
Additionally, with short-term tenants, STRs are normally less risky. There is little risk of a single renter suddenly stop paying rent, with no course of action except eviction, and a risk of damage fees. WIth multiple tenants each month, there is little risk of not getting a check each month, and many STR providers offer insurance in case of damages by renters.
When picking a market for STR, consider location, ROI, and local legislation. Many metro areas are considering, or have already, banned STRs. Pineda asks, “Is the market STR friendly? Is there any upcoming legislation that could change the dynamic and put your investment at risk?”
“Clearly, I’m a big believer in STRs,” Pineda Said. “I think they will continue to gain even more market share as time goes on. There will be more regulations as it becomes a bigger business, but the early adopters can cash in on some great opportunities.”