The market for short-term rental properties is in the news often nowadays. Many buyers are eager to invest in multi-unit buildings, detached homes and other properties that they can convert into short-term rentals. If you are interested in taking advantage of this trend in the real estate market, there are a few important things to consider.
Four important thoughts for investors
The real estate market for buyers in the Boston metro area is brutal. However, a strategic investment in a short-term rental could make you money in the long-run. These are some of the primary factors you should think about:
- Affordability and payment methods
One of the biggest hurdles for would-be investors is, simply put, affordability. The lack of inventory and the surplus of buyers means that entry-level investors need to have cash offers – or at least high down payments – at the ready.
- When to purchase
Although the market is strained, there is no sign of it improving in the near future. Now may be a prime time to invest. Mortgage rates will likely rise in the near future. Appreciation of value will continue to rise as well; between 2020 and 2021 alone, it increased 16%.
- The current housing crisis
The boom in short-term rentals has contributed substantially to the current housing shortage. Bostonians are struggling to buy homes or find long-term rentals due in significant part to the popularity of Airbnb and other short-term rental companies. Adding a short-term rental would only exacerbate the situation.
- Whether you will live there
Airbnb, the best-known short-term rental company, requires owners to occupy the building that they offer to guests. If you try to skirt around this rule, you could face a permanent ban and other penalties.
With the numerous regulations surrounding real estate investment and rental properties, you should also be exceedingly careful about obeying the law. Violating a rule – even if accidentally – could result in expensive civil fines that detract from your potential profits as a landlord.