Bigger Pockets: Has the Short-Term Rental Goldmine Run Dry?
In real estate, trends can last for years before playing out. And some investment strategies can change over time as events change as well. One popular trend of the past few years has been the rise of short-term rentals.
Low interest rates made it easy to buy a property with low monthly payments. And short-term rentals offer far more monthly cash flows relative to a long-term rental, even with the added costs of cleaning and property management.
However, several factors are now playing against this trend. Rising interest rates make the cost of buying a home more expensive. And post-pandemic travel has flattened out a bit.
Meanwhile, there’s been a record number of short-term rentals as investors piled into this trade. With more properties competing for the same number of customers, occupancy rates have started to rise.
This trend may be ending. But in some markets, it will still likely perform fine. Investors who bought rental properties with a short-term market in mind may still be able to profitably switch over to a long-term rental easily.
For investors still interested in short-term rentals, offering higher quality and amenities can help stand out among today’s high competition. And those who are flexible enough to embrace last-minute bookings can likely grab extra income from their rentals.