When you last were in a holiday rental–almost sure to have booked it on websites like Airbnb, VRBO as well as Vacasa–you might have thought: ” I should do this.”
It’s a well-known concept. A few hosts who reside near a major entertainment spot or the heart of a popular holiday destination rent their entire house or a space for a weekend, or more. Some buy a home solely as a way to invest money and then be let out for rent by the night or during the week.
The money can be a blessing for homeowners as well as an source of income for investors. It can allow some people to pay off mortgages, pay for vacations, or even put their children through college.
Find a real estate agent
An agent in the local area will answer your questions, provide advice, and arrange house tours.
Contact an agentBut, before you go out and purchase any investment properties to use as a short-term rental It is important to know the details of the market that you’re targeting, how much you could rent a room for and the amount you’re likely to make. Naturally, certain cities have higher profits than others.
That’s where the team behind data at Realtor.com(r) is able to help. We examined the areas in which the short-term rentals offer the highest earnings potential. The results we came across were not a surprise.
Renters are seeking out properties where they can enjoy the most popular outdoor activities such as lakes, beaches, or ski slopes according to Bram Gallagher, an economist who studies short-term rental information at the AirDNA, a research company. AirDNA.
It’s not only the most popular tourist destinations that make some money. as the evidence suggests.
In places where demand isn’t as high the cost of houses there could result in them being just as profitable as the more popular locations.
“What you’ve got is places where real estate prices maybe haven’t bloomed as quickly as the rest of the nation, and yet still have some really interesting points of attraction,” says Gallagher. “There really is a wide variety of places represented here.”
To find out in which you can purchase an apartment to use as a short-term rental property and make the most profit to begin, we looked at Realtor.com home prices in all metropolitan and micropolitan regions with at least 25 listings for short-term rentals each month during the past year. We took into account the 7.4 percent interest rate on mortgages (the average rate at the middle of August, as per Mortgage News Daily) to determine the amount buyers will be spending annually. This figure assumes that buyers pay 20% down and takes into account typical property taxes as well as insurance costs.
We then merged that information with AirDNA information on the amount the typical short-term property could be expected to bring in income across the country.
Note: These figures don’t include fees for managing the property. Local experts suggest that fees could cause hosts to lose anywhere between 10% and greater than 30 percent of the profit from the property. Cleaning costs, maintenance and repairs also cut into profits.
The constantly changing regulatory landscape affects those who manage temporary leases. A number of municipalities, like New York City have tightened the rules for those who are able to – and cannot rent their properties for short-term rental. The move comes as cities need help with the rising cost of real estate caused by a shortage all-year-round rental properties and houses available that are available for sale. Investors should be aware of their options, learn what’s allowed and not in the area they are interested in, and be mindful that laws could change soon.
In addition, not all hosts will reap the annual potential profits we provide below. These are earnings that exceed the minimum, Gallagher stresses.
Let’s now examine where the research shows hosts are raking in the most cash.
Where short-term rentals make the most money
The Crestview metro, located in the panhandle of the state, contains the more well-known Gulf Coast vacation town of Destin and several other popular destinations, such as Santa Rosa Beach. The west side of Crestview to the west is Pensacola and Pensacola Beach, known for its famous white-sand beaches.
It’s not surprising to find that Crestview metro has the highest number of temporary leases than any other area we have listed. The metro, with around 293,000 people, has nearly 8,000 average monthly listings. The information indicates that one in 15 households within the metro is listed as a monthly rental for short-term use.
For newcomers, the biggest challenge is identifying the best opportunity for them, says Mandy Reigart, who is a real estate agent from Realty ONE Group in Destin
“If I could find properties for $725,000 that would net $91,000 a year, I would be the busiest agent in the area,” she claims.
She claims the fees for property management can knock 20 to 30% off the profits. Additionally, new zoning laws have some regions not allowing property owners to advertise their properties.
Reigart’s recommendation for those considering entering the rental market for short-term rentals in the region is to locate agents and bankers who know the regulations and rules.