Updated over 4 years ago on . Most recent reply
How to analyze short term rentals
Hey, I am Emanuel. I am new to real estate investing and had a question on short term rentals. I realized that I cant afford a property in my market so I found a new market where my price is reasonable. In this new market short term rentals are popular and it has caught my attention and I have been eager to learn. My question is, How would you analyze a short term rental and what makes it a good deal? I know how to analyze a long term rental and i also know what makes a long term rental a good deal. Thanks in advance for your help.
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For a short term rental you'll need to know the average occupancy rates (in normal times and in the current era) and the seasonality and how that affects the rates. You'll also want to know what is standard for furnishing and amenities for your competition. Run numbers for linens and other soft goods that will need replacing periodically and include the initial furnishing in your acquisition budget, too. And keep in mind that management is more than a long term property manager, too.
In my market, in Pinellas County in the Tampa Bay area, we're seeing above normal occupancy right now and rates are through the roof! We are very peaky for seasons usually -- we have a few peak seasons and weekends that drive the year. Then we can fill in the rest with rates that just get occupancy.
What makes a short term rental a good deal is the same as any other investment -- cash flow. Usually there's more cash flow on an STR than a LTR, but there's a lot more turnover and work, too!