Hi there.
Every one is talking about short-term rentals, long term-rentals, Airbnb, "Do I keep a tenant?"
So, many questions.
Are short-term rentals really a good investment?
We're going to talk about it in this episode.
Let's go.
Hi, I'm Noelle Randall, real estate entrepreneur, mentor and momified.
And in this episode, we are covering some key things on "Are short-term rentals really
a good investment?"
We're going to talk (1) short-term versus long-term rentals, what's the real numbers?
What's the money really look like on both.
Number 2, how much does it cost for short-term rentals verrus a long-term rental.
Is there a difference?
Is one more expensive than the other?
Let's talk about it.
Number 3, we're going to talk about how to use all of the resources.
I'm going to give you some resources, some tools and some things so that you actually
can make money and make a good investment out of your short-term rental or find out
if this not even worth it.
Alright.
So, let's dive in.
What is a short-term rental versus a long-term rental?
And are short-term rentals a good investment?
Well, in order to know if it's a good investment, you got to really kind of understand.
So, I'm going to take a quick second and just explain it to you.
A short-term rental is Airbnb or it's a booking.com.
It's a vacation rental property.
It's a property that you use for short-term rentals.
People that are going to book for just one night or 3 nights or 5 nights.
In all cases, the property is furnished and the property has all the amenities of a hotel
or a vacation rental property.
So, it has everything that a person would need to on vacation or to travel.
It must have everything in order for this to really work.
And there is a cost involved with getting all of those things.
On the other hand, we have a long term rental.
We have just a property that you have.
You put it on your website and people can rent it for a year or 2 years and they stay
there.
They move all their stuff into the property and you just collect rent.
Which one is easier to deal with?
So, we have short-term where people are coming in and out.
And you have to furnish the property.
You have to have towels and sheets and plates and pots.
And then on the other hand, we have a long-term rental with a tenant that's going to be a
year or 2 years and they're going to pay per month.
So, every first or a third of the month, you get a check.
Which one of these 2 things is better?
Well, I'm here to tell you.
I have been a long-term rental property owner and a landlord for many many years.
At one point, I had over 42 rental properties.
Now, I have transitioned pretty much all of my inventory, all of my portfolio to short-term
rentals.
So, that's pretty much going to let you know the answer to that question.
But let me break down the numbers for you as to why the short-term rentals are a good
investment and why I seem to be making more money than I was making with long-term rentals.
So, with the long-term rental model, like I said, the property is completely empty.
You have a refrigerator, you have a stove but not much else.
You don't leave televisions and couches in those properties, okay?
And you put those ads out maybe on Craigslist or Zillow or different rental property management
companies.
And you find a tenant who wants to stay there for a year or 2 years.
In fact, when I did property management and I was trying to keep people in my properties
for 2 and 3 years.
Literally.
That's how I actually would make more than other people with my rental properties.
But man, let me tell you, short-term rentals are where it's at.
Instead of charging for a whole month; and I am charging 1500 or 2000 dollars for the
month, I charge by the night when it comes to my short-term rentals and I am making way
more money even with the cost to furnish the properties.
And we're going to break that down.
So, the question that you had, "is this a good investment?"
I'm going to tell you the answer for me is yes.
And I'm going to tell you why.
When it comes to short-term rentals versus long-term rentals, we already know, we have
to furnish the property, we have to equip the property.
And that has a cost that comes with it.
So, with short-term rentals, you have to think about the money you're going to spend.
Furnishing the property and fully equipping the property with the appliances, the silverware
the pots, the plates and all the amenities that people would need for travel.
Now, many of those things are super inexpensive.
In fact, I'm going to teach you how to get so much of those things on the cheap.
Many of them even from the dollar store.
In fact, I have actually a link to a video here showing you how to do that.
So, here's the thing: Most people think, "Oh, my gosh.
Short-term rental is going to cost me so much money because I have to do all of these things.
I have to get all these furniture for.
I have to get all these stuff."
And the key to it is actually that part is not that expensive.
And you really make that money pretty quickly by charging per night versus charging for
the month.
Let me give you a quick break down.
So, with the regular rental property, on average you have a mortgage...
Let's just use round numbers.
Let's say you're mortgage on your property is a thousand dollars a month for 3 bedroom,
2 baths.
Now, in most cases, people are going to rent that property for like 1250 or 1300 dollars.
The money, the cashflow on most rental properties is really not just much, okay?
In many cases, I think the average was like $300 per month.
But you are gaining equity in the property because as those people are paying the lease,
they're paying down your mortgage.
And the property value is rising.
So, as a real estate investor, you know, I always going to teach you the business of
it.
Owning property is a good idea in the long term because you have appreciation of the
property.
You're building equity and we have what's called leverage appreciation where the tenant
is paying for the mortgage.
You don't really have that expense.
And then you are making a small profit.
And the property is going up in value.
So, let's take that concept and let's multiply it with short-term rentals.
So, like I said, you already making money on the property.
The property is going up in value.
They're paying down the mortgage.
So, why not make even more money per month than less?
And when you have a tenant that's staying there for a year or 2 years, they have what's
called market rent.
They're going to look and see what properties are going for by the month in your area and
that's what you're going to charge.
But the great thing...
And here is the great thing.
Oh, my gosh.
The secret of Airbnb is it's really more of a competition with hotels.
So, you really need to do your research and see what hotels are getting per night.
Not what properties rent for per month.
And this is the key ladies and gentleman.
So, on average, the hotel...
I think the average hotel in America is like $133 per night.
Let's just use that as an example.
And you times that by 20-25 nights per month, okay?
That's not even full occupancy.
That's not even having someone book your property every single night.
So, you can quickly see how much more profitable it is renting the property per night on an
average of $133 per night which hotels charge versus for a whole month competing with other
rental properties.
Number 3, short-term rentals are exploding.
The demand for how people travel, how people work.
Oh, my gosh, 2020 is like the year of the millennial, I guess.
They are just travelling.
They're working on the gig economy.
Many of them are travelling with friends and as groups.
We have bigger families.
Families travelling together.
And so, there are so many websites dedicated to the short-term rental market.
And so, it's a good investment because there are more and more outlets for you to lease
your property.
And people are taking less and less of a cut.
So, the more websites there are you can list your property and that competition kind of
up it self with Airbnb, booking.com, vacation rental by owner.
All of these different...
Turnkey is another one.
The list goes on.
There's nothing...
There's just hundreds but there's more than one, okay?
And they are competing with one another for your properties.
So, may of them are lowering their fees.
And more of it is coming to you.
It's awesome thing.
You need to decide if you're going to own a couple or if you're going all the way with
this thing.
That really makes a difference.
So, when we're talking about if something is a good investment.
Noelle has a saying: One and two properties is a headache, 10 is a business.
Because having 1 or 2 rental properties is just a lot of running around especially if
you're managing it yourself.
You're probably not making a lot of money.
And so, it's probably just not that great of an investment for you especially when we're
talking about a regular tenants that staying there for a year or 2 when you're only making
2 or 3 hundred dollars a month.
But let's change the game a little bit when we talk about short-term investments.
You literally can have less than 10 properties.
In many cases, 5 or 6 and be making a 6-figure salary from this, okay?
6-figure income.
You can literally have 5 or 6 properties and make a 6-figure income with short term rentals
versus with long term rentals.
The numbers are just so much different that the profitability on the short-term rentals
are usually so much better than with the long-term rentals especially when you scale it and you
have multiple properties.
So, the key to making this a good investment, in any case, it's not to have 1 z's, 2 z's.
You really want to go for full business and try to get as many properties as you can.
And my recommendation is somewhere in the range of at least 6 properties, okay?
As goal.
Now, again, I'm not telling you to run out and go buy 6 properties or get 6 Airbnb's
immediately.
But know that you don't want just one or 2.
You really want to make a business out of this and you really want to get it to a point
where you have at least 6 properties.
And you're going from there so that you can have some real income.
Alright, guys.
Hopefully that wraps it up and you know now.
You are confident if short-term rentals are good investment for you.
I've given you the information that you need.
I'm going to keep giving it to you.
And I want you to go ahead and subscribe to my channel.
I'm giving you great content, free information.
I'm really trying to give you a free course right here so that you can be successful in
this business.
To your success.