Implications of converting home from SFR to short term rental?

Question

Hi all - can you please help me think through this scenario?

We are looking to buy a home that will be a SFR. One thought that's in the back of my mind though is the potential for turning it into a vacation rental down the road when travel opens back up again. What are the implications if we decide to do that? Do we need to wait a certain # of months / years before we do? Do we need to tell our lender? I'm also interested in purchasing another property - either multifamily or another vacation rental (which will be classified as an investment property from the start) - will converting our soon-to-be current property into a vacation rental impact that process in any way?

Thanks so much for any thoughts / replies.

Cherie Orellana · Answer

Most short term rentals do well in Salt Lake county and Park city area do well no matter where they are located.  I had one in Kearns for a while and had people coming to visit family, ski trips, conventions, concerts.  It was booked 90% of the time all seasons.  The price per night did fluctuate based on season a few dollars more or less.

One thing I would consider is making sure it’s in a pocket of zoning that allows short term rentals.  If not, I’m not saying don’t do it, but definitely have a plan B and run your numbers based off of if it were short term or long term rental in case you had to change your plan for some reason.

I can also say with my experience in short term rentals, that I had a couple issues with locals trying to have a party. Once I changed it to a 2 night minimum it solved that issue.

Jonathan Mueller · Answer

Depending on the size of the home, its a large investment to furnish a property for short term rentals so that is something to consider, it could cost 20k in furniture/linens/kitchen equipment and dishes. Will this property be an easy to drive to destination for short term rentals? Our SLC airport just said that they don't expect to get back to 100% for 3-5 years.

Paul Sandhu · Answer

Your main concerns are how you are going to clean/restock/repair it between rentals, and how you are going to promote it.