Pros & Cons of Investing in a Short-Term Rental
Owning a short-term rental is a great way to generate additional income. Sunshine Staters are particularly well positioned to invest in these properties: After all, seven of the top 25 short-term rental markets are in Florida.
Pros of an Investing in an STR
Income Stream
Hosting a short-term rental property is a great way to diversify your investment strategy, bring in some extra cash, or add to your retirement income.
Tax Benefits
Depending on your situation, some tax breaks may be available to investors. You might qualify for deductions related to mortgage interest, repairs and maintenance, advertising costs and other hosting-related expenses.
Easy Startup
The vacation rental market is still relatively new, so there really aren’t many hoops to jump through. The process is pretty straightforward: Buy house, furnish house, advertise house, rent house, make money.
Higher Rent
You can maximize your income by adjusting prices based on local trends. If you're in high season, you can make much more money than if you were locked into a monthly rate from your renter as with traditional rental properties.
This also means that every time Tampa hosts a Super Bowl or national championship game or World Series or Stanley Cup, you’ll be able to charge higher rent over that period.
Cons of an Investing in an STR
Startup Expense
All a traditional landlord has to do is provide an empty space for a renter to move into. By contrast, a short-term rental owner is more like a hotelier. You’ll need to provide the furnishing basics: Bed, couch, TV, linens, dishes, essential pantry items—the works.
Rules & Regs
You’ll also need to familiarize yourself with local regulations surrounding short-term rentals, like the ones you’ll find on this list of Short-Term Rental Restrictions for Pinellas, Hillsborough and Pasco Counties.
Seasonality & Unpredictability
Short-term rentals can be affected by a variety of factors, like market trends, low season and red tide. As a result, your rental could sit empty for days or even weeks.
Diversifying Your Investments with an STR
With a low barrier to entry and the potential for high returns, a vacation rental can be a great addition to your investment portfolio. If you’re thinking about putting your retirement savings to work, you can enjoy the benefits of owning an investment property without the long-term commitment to one tenant.
