When we went to Kauai in 2012, we fell in love with the island. We fell in love with it so much that we actually thought for a second about living there (we eventually changed our minds since it’s so far away from everyone we love). However, that doesn’t mean that we didn’t find some awesome houses and condos when we searched online.
We found one condo that was a part of a resort and it was very affordable. We had personally made a quick stop at the resort when we were at the island to see their beach (it was situated near one of the island’s famous beaches), so we were sort of familiar with the area.
We knew that the place was too small to live in, but it would be perfect for a getaway for us, and it would be a perfect place to rent to others on websites such as Airbnb and VRBO.
As you all know, I’m always thinking about ways to diversify my income and to find new ways to make an income in my life.
However, there are both positives and negatives of playing in the short-term rental game.
Positive: You can use the property as a vacation home.
If you are buying a property in a vacation destination, then you can possibly use the property when there is a vacancy. It’s not technically “free,” but if no one else is using it then you might as well.
Negative: You will spend more money advertising your short-term rental.
With long-term rentals, you really only need to advertise your property once a year or whenever the contract is about to expire. However, with a short-term rental, the advertising really never stops. You will have to keep your listings updated and you will have to continually keep up with advertising because short-term rentals are usually not for very long.
Positive: You may be able to make more money than with a long-term rental.
With a short-term rental, the amount of money that you can make is usually significantly higher than with a long-term rental. You might be able to charge $200 a night for a place that usually has a monthly cost of $1,000. Yes, that means that there is the possibility that you can rent your short-term rental out for one week and make a similar profit as if you rented it out to a long-term renter on a monthly basis.
Negative: You will be paying upfront for most expenses.
With a long-term rental, usually costs such as utilities, cable, etc. are shifted to the renter and put in the long-term renter’s name. However, with a short-term rental, you will have to pay for all of these expenses as the cost is all lumped together into their nightly rate usually. This means that you will want to make sure that the rental has a low vacancy rate because you don’t want to be losing out on money.
Positive: You won’t have to deal with bad renters for long.
If you do happen to have a renter that you do not like, then at least they are only in it for a short-term rental. If you had a bad renter but you made a long-term contract with the person, then it can sometimes take a very long time to kick the person out.
Negative: Short-term rentals usually require more work.
With a long-term rental, you can usually just hand the renter the keys (after background checks, etc.) and check on them every so often to make sure they haven’t burned the place down. However, with a short-term rental, you might have multiple different people in your rental each week, which means that there will be more cleaning needed (you can charge a cleaning fee though), more maintenance possibly, and so on.
Also, there will be more people living in your rental, which means that there may be more chances for people to ruin things.
Are you interested in making money through a short-term rental? Why or why not?