This summer, a lot of people have been interested in investing in short-term rental properties, also known as vacation rental properties.
First, you have to remember that our market is seasonal. It would be difficult for you stay during the summer and then rent your property out in the winter—our typical off-season. It just won’t generate the kind of income you’re looking for.
Given that our market is seasonal, people are coming and going at different times. Because of this, you’re likely to end up with your property staying empty for a period of time during the month. This inconsistency won’t do great things for your bottom line.
You also need to take into consideration the rules and regulations of the county and homeowners associations that your property is governed by. In our area, Flathead and Lake Counties are putting or have already put regulations into place for short-term rentals, so you need to be aware of those to avoid any legal troubles later on.
Then, there is the question of management. Management of your property can be done long distance or you can hire a local property manager with experience in short-term rentals that can take care of the property for you. Be aware of the costs associated with that as well.
If you do use the property yourself for a portion of the year, then there are some tax limitations that you need to be aware of. There is a certain period of time that you can stay at the property and still consider it an investment rental property.
Finally, you need to have an exit strategy. If it doesn’t work out for you, is this property something that you will be able to sell easily, or is it going to be an ongoing economic burden until you can get it sold?
These are all things to consider when you’re deciding to purchase an investment property for short-term rentals. If you have any additional questions about this topic or you’re looking to buy or sell a home in our area, please don’t hesitate to reach out. I’d be happy to help.