The Complete Guide to Short-Term Rentals, by an Experienced Luxury Short-Term Rental Manager

Short-term rentals can be a fulfilling and lucrative investment. They come with many benefits and offer property owners high profit margins and room to grow. And, if you partner with the right short-term rental manager, the work you do can be little to none.

Here we’ll discuss everything you need to know about short-term rentals and how to succeed in the business.

What Is a Short-Term Rental Property?

Short-term rentals are apartments or other properties with a lease shorter than the typical 12-month period. Short-term rentals (STRs) often get leased for fewer than 6 months, sometimes as short as a few days. 

The short-term rental model is popular for vacationers; however, STRs also work for those going between leases or living in cities temporarily. There are many options for leasers in the short-term rental game.

STRs are an excellent way for people to earn side income and benefit from other perks such as appreciation, tax benefits, having a place to stay for vacations, and more, all of which we’ll get into in this guide. Short-term properties also present a unique opportunity for passive side income when outsourced to a knowledgeable short-term rental manager.

Are Short-Term Rentals a Good Investment? More Profitable Than Long-Term Rentals?

Whether or not STRs are a good investment depends on various factors. However, STRs are an excellent investment and can be more profitable than long-term rentals when managed correctly.

First, you need to make sure you select a growing market. Vacation markets are some of the strongest for short-term rentals, including Miami and Southern Florida in general. Here’s a detailed breakdown of Miami’s STR Airbnb market, including average monthly revenue, amenities, and a heat map. 

TLDR; the average monthly revenue for a STR in Miami is $2583.02 per month, however drastically increases when investing in luxury properties!

Additionally, you need to select markets that have favorable STR legislation. Some cities, such as New York, are strict with their regulations and can make your and your short-term rental manager’s job that much harder. 

And finally, the short-term rental manager you choose will be the driving force behind whether or not your properties constitute good investments. Your manager needs to be proactive and experienced to best optimize your properties’ cashflows. The Renté Group is proud to be your one-stop shop for hassle-free short-term rental management. We’re experts at optimizing your revenue and minimizing your stress.

Benefits of Successful Short-Term Rentals

Wondering why short-term rentals are good? There are many benefits. Here are the 7 most impactful.

Benefit 1: Tax Perks

Short-term rentals come with many tax benefits for property owners. We recommend talking with a qualified CPA to maximize these benefits. For now, here’s some more information to get you started.

Depending on the use of your property, you can write off some of its expenses (such as rental income, insurance premiums, mortgage payments, etc.) as tax deductions. 

STRs are uniquely accessible in this regard. For most other real estate investments, you must achieve real estate professional status (REPS) to offset W-2 and other income taxes. To achieve REPS, investors must spend more time on their real estate than they do at their full-time job; that’s a high bar that few achieve.

However, STRs are exempt from that rule. Instead, investors must only meet “material participation requirements.” These requirements are much easier to achieve and allow you to offset your investment losses against personal income.

Benefit 2: Appreciation

One benefit to real estate, in general, is its appreciation. Properties tend to go up in value over time; as you make regular monthly income with your STRs, the property’s value increases as the years go by.

For instance, the average total appreciation from 2000 Q1 to 2021 Q4 in Miami is 271.1%, with an average annual rate of 6.14%. If you’d purchased a property for $100,000 in Miami in 2000, it would have been worth $271,000 in Q4 of 2021. That’s a $171,000 gain (while you were also earning monthly income for the past 21 years and likely to had paid off your mortgage)!

Your short-term rental manager can help you manage the property on the day-to-day so you can enjoy the benefits of appreciation without the daily hassle.

Benefit 3: Recession-Proof

One excellent benefit to STRs is their ability to withstand recessions. We experienced this during the crash of 2008 and the subsequent recession. People didn’t stop taking vacations; instead, they tended to travel closer to home and plan shorter trips.

Another example is the Covid-19 pandemic. Throughout 2020, the percentage of short-term US travel bookings rose 25% compared to before March 2020. By late May of 2020, online searches for vacation details were 100% higher than the previous year, despite cancellations rising 534% in March of 2020 when the pandemic first shut things down. 

Even amidst an unforeseen pandemic and a brief (but substantial) dip in STR interest, the industry remained strong and grew throughout the following years. Your short-term rental manager will be well-versed in handling slow periods and should help keep your properties recession-proof.

Benefit 4: Passive Income

Short-term rentals have the power to provide you with passive income. This type of income is generated on the side with minimal to no effort and allows you to spend your time as you please.

The short-term rental manager you choose will be a massive part of this. If you don’t want to manage the day-to-day yourself (which can be a lot of work), a short-term rental management company can handle it. This truly creates the passive in passive income. 

Interested in working with the leading short-term rental manager in Southern Florida? Contact The Renté Group today.

Benefit 5: Dual-Use

If you’re wondering why short-term rentals are good, ask yourself: do you enjoy vacationing? One of the benefits of STRs is your ability to use them yourself. Simply block off the rental’s calendar so nobody books when you want to be there. 

As we like to say: “Own a second home in Miami, for free.”

Benefit 6: Fewer Issues with Tenants

One massive drawback to long-term rentals is being stuck with a poor tenant. You can find many horror stories online of landlords dealing with tenants who trash their property, disrespect neighbors, or fall behind on rent. 

You can rest assured that you aren’t locked into a long lease with anyone with short-term rental properties. Your short-term rental manager will conduct due diligence to ensure only respectful guests use your property, but nothing is ever guaranteed. If you end up with a bad guest, it’s much more temporary with STRs.

Potential Drawbacks of Short-Term Rentals

As with anything, there are possible drawbacks to STRs. 

Potential Drawback 1: Property Management

If you’re looking to generate passive income, the property management side of short-term rentals will be a significant con. Although luxurious and lucrative, short-term rentals require a lot of work. You need to prep the house, advertise, find renters, maintain the place, clean up after people leave, and more. 

Luckily, outsourcing to a short-term rental manager takes care of this all for you. The Renté Group specializes in luxury rental management in Southern Florida and won’t hit you with any surprise management fees. Let us help you!

Potential Drawback 2: Finding Guests

Short-term rentals are only profitable if occupancy rates remain high. Finding people to stay in your properties can be challenging, especially during slow seasons.

Luckily, the best short-term rental managers, such as The Renté Group, have the technology to address occupancy issues. Our platform integrates with prominent travel agencies to help you maximize revenue with dynamic pricing tools. We also have in-depth property analytics to help you break down income streams and understand revenue better.

Potential Drawback 3: Expenses Can Add Up

Being a responsible STR owner means accounting for expenses. As with any property, repair fees can come up unexpectedly. Make sure you’re prepared for these expenses and can address them quickly to mitigate revenue loss.

What’s Involved in Starting a Short-Term Rental Business?

Managing short-term rentals is a dynamic process. Here are some of the main components of running these properties.

First Things First: Do Your Research

Before you can begin, you need to do your research. Complex factors determine how best to succeed at the STR game, including occupancy rates, competition, demographics, permits, local laws, and more.

It’s best to consult a professional to get a complete lay of the land. If you need some input during the info gathering stage, we at The Renté Group would love to help! We’ve been in the game for a while and know how to help you succeed.

Component 1: Customer Service

Customer service should be at the forefront of everything a short-term rental owner does; similarly, if you outsource to a short-term rental manager, they should share that core belief. 

Customer service gets 5-star reviews, and it starts at the very beginning of the booking process. Answer questions any potential guests may have, and be prompt with your replies. Accommodate their needs and always be friendly. Especially in areas saturated with STRs, exceptional customer service makes a property stand out.

Component 2: Tenant Screening

Property owners need to be nice, but so do tenants. You don’t want to take in guests who disrespect your rules or trash your property. 

To screen tenants, you can:

• Start by establishing rapport with them and get to know them and the purpose of their trip.
• Clearly explain the rules of your property, so tenants fully understand. 
• Lastly, make sure to check reviews from previous landlords.
• Depending on the exact situation (this wouldn’t work for quick Airbnb stays, for instance), you can run a credit check or background check in some instances. If you plan to have a tenant in for multiple months, this is a good idea.

Component 3: Recordkeeping

Short-term rental management is no small task. As a property owner, you need to stay on top of your records. This includes keeping track of your listings, tenant screening, maintenance, and reviews; this can be especially overwhelming with multiple properties or when turnover is high.

An excellent short-term rental manager like The Renté Group can do this recordkeeping for you to ensure your listings are on track. 

Component 4: Maintenance

All properties require maintenance, and STRs are no exception. Outstanding maintenance problems will negatively impact your occupancy rates. Have a budget set aside for maintenance issues, and be on top of them.

Succeeding Long-Term at the Short-Term Rental Game

With everything we’ve already discussed in mind, here’s the last tidbit of information you need to succeed. There are steps you can take to ensure long-term success in the short-term rental game:

• Growing and scaling. Starting off with one STR property is a great idea. At some point, managing that one property will become easy. Once you’ve figured it all out, consider adding more properties to your portfolio and enjoy even more benefits.

• Watching the competition. Always be on top of your STR competition. How can you outstrip them? What are they doing well that you aren’t?

• Listing on multiple platforms. Don’t just list your STR on one site; list it on as many as you can to help drum up guests.

• Considering direct bookings. All rental sites take a fee from your earnings. Once you’re established, consider booking through your own site, so you aren’t losing a fee to these companies.

• Knowing your target guest. Not everyone will want to stay at your property. Know the type of guest you best attract and market to them.

 

Your short-term rental manager will know how to handle all of these things to ensure you’re succeeding at the STR game for a long time. The Renté Group would love to be your partner on this journey, so contact us today!

That’s It For Now!

Now that you’ve made it through this guide, we hope you feel inspired and prepared to jump into the short-term rental space. It can be a fantastic way to generate passive income while enjoying the perks of property ownership.

If you’re feeling overwhelmed and want to find a short-term rental manager to help, reach out to us at The Renté Group. We’ll be by your side every step of the way, ensuring you maximize revenue while minimizing hassle.

We wish you the best of luck on this exciting journey!