Investing in real estate, especially in rental properties, comes with its own set of risks. Making a hasty investment can cause financial loss.
To ensure the success of the investment, there are four tips that every short-term rental investor should know, according to Business Insider, which cited Techvestor cofounder Sabrina Guler. The company has a $65 million fund and manages 130 short-term rental properties across the United States.
Stay Away From Condominiums
Condo units have become one of the most popular short-term rental properties. It comes with plenty of benefits, including staff members to take care of the grounds, landscaping, and maintenance. However, Guler said having a homeowners association can make investments more difficult as they have control over whether owners can rent their properties and for how long.
"I don't use that property as a short-term rental anymore. It's a long-term rental," she said. "I did that because the HOA changed. It required 30-day-minimum rentals. That's actually a big thing that I teach people - I would not recommend buying a condo for that reason," Guler told the publication.
Don't Be Afraid of Taking on Debts
If you're investing in a property, Guler's advise is to not be afraid to take on debt to pay more than the minimum required downpayment for a property. In general, people who can pay above the minimum required downpayment could benefit from better interest rates and lower monthly payments, according to Better Lending.
In addition, paying more than the minimum downpayment would give you better odds of getting the property in a multiple-offer situation.
Avoid Turnkey Properties
Turnkey properties are fully renovated homes or units that can be rented out immediately upon purchase. While turnkey properties minimize the time and effort needed to prepare a property for rental, Guler said not putting in enough effort will unlikely yield returns.
Instead of purchasing turnkey properties, Guler recommends investing in units that allow property owners to custom-create amenities and spaces. This helps the unit stand out from other rental properties.
Short-Term Rental Properties Can Limit Creativity
Short-term rentals allow owners to focus on designing spaces, giving them opportunities to pick out the furniture and decorations. However, scaling your portfolio of short-term rental properties can prevent you from focusing on design. As such, Guler recommends investing in boutique hotels if your passion is on the creative side of investing.
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