Do you ever hear about something so often in such a short period of time that before long, you’re pretty sure the universe is trying to tell you something?
That’s the case for me, as a number of clients have recently shared stories of renting their investment properties to non-traditional tenants.
What’s so unusual about their tenants?
They typically don’t stay very long.
While it may be difficult to imagine anybody ever thinking of your duplex as a vacation getaway like a cabin in the Smokies, thanks to web sites like Flipkey.com, Homeaway.com and vrbo.com, it’s now possible. And investors are receiving rents for their furnished properties roughly twice the market average for a traditional tenant.
These tenants range from people looking for a weekend getaway to those who are here for several months on a work assignment.
In exchange for an annual advertising fee (usually starting around $300), these websites allow you to feature a dozen or more photos of your property, describe its amenities, the amount of nightly, weekly or monthly rent, as well as offer a calendar of availability.
To reserve the property, the prospective tenant contacts the owner directly, who may accept payment via credit cards or Paypal. Fees may not only include rent, but a security deposit and cleaning charge has well.
Owners having success with this new way of maximizing cash flow tell me a number of things are critical to ensure success. A property must be:
- Freshly painted
- Well staged with quality furnishings and linens.
- Well photographed. Just like listing a duplex for sale, photos must jump out at online viewers, who are making their decision to stay at the property almost entirely on what they see on the Internet.
- Well reviewed. While properties new to this program may not yet have reviews, pleasant stays make for better reviews, which ultimately makes the property more appealing to future visitors.
While this appears to be a great way of maximizing return on your investment, it’s important to note owning extended stay rentals does have some down sides. For example, if you’re in a seasonal climate where it snows, bookings may be sparse over the cold winter months. Also, due to the more transient nature of the tenants, you will be faced with cleaning, as well as washing sheets and towels after every guest departs.
Finally, while this may, on the surface, look more like a hotel than a traditional rental property, many cities (including Minneapolis) nonetheless require the property owner to have a valid rental license.