Vacation Rental or Traditional Rental?
Hi all! My husband and I recently bought a second property and were planning to rent out our current home. We live in Bend, OR, a very touristy city where Airbnb/VRBO's are booming. For this reason, our real estate agent brought up the idea of doing this with our property instead of turning it into a traditional rental. I am not as familiar with Airbnb/VRBO, and naturally not as comfortable with it. But I also don't want to rule it out completely and miss a good thing... So I thought I'd run it by everyone here and get some opinions...
Pros and Cons of vacation rentals I've come up with:
Pros
- Living in a city with year round tourists (home is in a great central location)
- Potential to make more $$ than a traditional rental
- Less wear and tear on the property (in theory)
- Access to the property weekly to clean/make sure it is being maintained
Cons
- No guarantee of bookings
- Personal time investment to clean after each check out
- 3% fee charged on every booking from Airbnb (VRBO is even higher)
I am 50/50 on what route to take here, so any advice is welcome! Thanks!
-Noelle
Most Popular Reply
@Noelle Saingarm - You are going to need to do an analysis of what your house will bring in if offered as a short term rental. Once you have a good idea - you will need to subtract ALL of the expenses. Its really easy to underestimate the amount of money that goes into a STR. After all, you are responsible for paying all costs associated with the rental. Some of which include:
Debt Service
Insurance (proper STR insurance - not a standard fire policy)
Taxes (both normal property and STR taxes)
Vacancy
CAPEX
Electricity, Cable, Internet
Furniture
Sheets, towels, etc
Cleaning/maintenance
Gardening/lawn-care
Etc.
Im sure I missed a few - but you get the point. On a SFR - you really need to be able to get a high nightly rate with minimal vacancy in order to make the numbers work. By no means am I saying not to do it - just make sure that you take everything into consideration.