Real Estate

Risks

The next year I will be learning about short term rentals, the risks, and the gig economy.  I intended to learn how to manage the risks which include:

1. Competition:

When owning property in popular locations there will be competition to keep your short-term rental booked.  Managing the price variations to book the rental unit will take time, research, and planning.

2. Vacancy Risk:

There is no doubt going to be the risk of vacancy.  There will be seasonal bookings and off season dry periods.  Being concerned about economic downturns is always a concern as well.  Short-term rentals can be sporadic, which needs to be managed. Bookings will tend to be seasonal and hard to predict. There are times when an investor can have many bookings, and there will be times when the listing will become vacant. Let's address the pink elephant on the webpage... Yes, the Coronavirus is a concern! This next year we'll monitor the progress of the pandemic and learn how other short-term rental properties manage.

3. Ordinances / Regulations:

Many locations are trying to control short-term rentals by including them in local ordinances.  This is all dependent upon the zone in which the property resides.  These rules are often found in a zoning code, planning code, or city ordinances. Luckily I deal with these codes daily in my current position, so I have been navigating these complex decrees.

4. Bad Tenants:

There are numerous concerns with whom will be renting the property. There could be liability from your guests' actions while on the property.  A guest may cause damage or injury while on your property. They could even cause issues to neighbors or property managers. It would be ignorant to disregard the fact that the host would be on the hook for this.

The type of person renting the property is of concern as well.  There are rumors of ladies (or men) of the night trying to rent short-term rentals for their clientele.  This creates obvious concern for your property and the type of traffic coming in and out of your investment.  Other concerns would be the rowdy partier who likes to demolish walls with their body...