Are Short Term Rentals Back?

Question

I'm interested to hear about other markets, but in Richmond Va we have been noticing an increase in short term rental request. Sometimes it's Owners who are looking to padsplit, some are asking about 3-6 month leases, and a few have wanted to live in their property 50% of the year. I wanted to know have these questions come up in other markets/areas and what are your thoughts on managing these properties?

Jeff Roth · Answer

Hi Alex from Richmond, VA-

Great question! You asked about short-term rental property demand and mid-term rental property demand in other areas besides yours and thoughts on managing these properties.

First off, short-term rentals are a great property class to own, especially if you "materially participate" with 500 ours in the management of your property for the IRS to consider it an active investment and able to write down your active or W-2 income with the expenses, bonus depreciation, and cost segregating the property for additional depreciation to reduce your income taxes.

There is short-term rental demand in many communities in Michigan because we have so much coastline and natural beauty as well as university, business, and hospital stay demand. Mid-term rental demand is also found with traveling nurses, professors, business, and insurance stays and helps in the off-peak season.

We partner with a statewide short-term rental property management company that also fills in the gaps in stays with mid-term rentals with dynamic pricing for those stays and events.

To Your Success!

David Peschio · Answer

@Alex Melara  We managed short term rentals for a while and stopped when the restrictions became to restrictive.  We have tried room rentals (concept such as Padsplit) but way too difficult to manage even though cash flow is greater.  We stick with the tradional long term leases in the Richmond area and this market supports that very well.