The 2020 Pandemic is leaving a big footprint on short term vacation rentals. Not only are open weeks remaining open, but booked weeks also have been canceled. Thanks to some extenuating circumstance guidelines, many cancellations have been penalty-free for the renter. Unfortunately for the landlords, there aren’t any breaks on mortgage payments, insurance, utilities, etc.
For many, a viable solution is to convert their property into a single-family long-term rental.
Furthermore, while the COVID pandemic has shut down many tourist attractions, significantly reducing the demand for rentals – especially in areas of high-level tourism, it’s not the only reason to consider a switch.
- Pandemics are not the only reason for an attraction to close. Sometimes economic factors or even fluctuations in the public interest are the factors that close attractions and reduce interest in a particular area.
- Some cities are instituting regulations regarding short-term rentals. These are hindering the opportunity to make a sustainable profit.
- Listing fees with organizations like Airbnb, Home-away, Vrbo, plus utilities, responsibility for total maintenance, stocking the kitchen, furnishing the property, etc. all cut into your ROI. Long-term rentals don’t bring in as much income, but neither do they encounter all the time and expenses.
- The high tenant-turnover of vacation rentals increases the cost of insurance, and upkeep, as well as unplanned expenses due to wear and tear, and accidental damage.
- As more and more people join the vacation rental business, the competition becomes an issue, often forcing lower rental rates and higher vacancies.
- Finally, short-term rentals require a considerably more intense hands-on approach than long-term rentals. Time spent communicating with potential guests, running the books, welcoming tenants, and then cleaning after they leave adds up.
How to make the switch is the big question.
Analyze whether your property is in an area prime for long-term rentals.
- Neighborhood: If your home is large enough for families, is it located in a desirable school district? Are there family-friendly activities nearby? On the other hand, if your home geared more for singles or couples, the school district will not be as significant as restaurants, night clubs, workout gyms, public transportation, etc.
- Is your home located in an area with employee-dense industries? This will increase the demand for housing.
- Is there significant growth in your area? Check with the municipal planning department for information on future developments.
- Check with local property management companies. Is there a high rate of vacancies, or are listings promptly snapped up?
Establish how much you can charge per month for your rental. The size and age of your home, number of bedrooms/baths, kitchen, amenities, and the average cost of utilities all play a part in determining the rate you can charge. Check out our blog post for more details.
Create your lease agreement. Most long-term rentals are 12-month leases (although some are 6-month). Once a renter has fulfilled their first 12 months, many landlords rent by the quarter or even by the month. Surprisingly, when tenants are committing to a shorter time, rather than another year, they stay longer.
Research your local and state landlord-tenant law. Staying legal is essential!
Remove furnishings. As a short-term rental, you furnished the home, but as a long-term rental, your tenants will bring their furnishings, aside from standard kitchen appliances. Selling these furnishings will give a boost to your bank balance as you are making the switch.
Have your home professionally cleaned. Consider a fresh coat of paint throughout the house –neutral tones, of course. Replace carpet when necessary. If you are replacing the carpet, consider vinyl, wood, or tile. Research the pros and cons of each for the area you are installing it.
Market. Market. Market. Write a great – and accurate –description. Include photos. Be responsive.
Switching your short-term vacation property to a long-term single-family rental can make the difference between a successful venture or one that doesn’t hold up under trying economic times. Long-term rentals remain steady even in difficult markets and can be more profitable and less time-consuming in the long run. Seek the advice and assistance of a property management company, such as Rentals America. That’s us, and we are here for you. We treat your home as our own. We offer a wide range of property management services to fit your needs as a landlord or homeowner. We tailor our services to ensure that you have the highest level of service for your home. Contact us today.