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Maximizing Returns: Insider Tips to Successful Short-Term Rentals
Cristina Lee & Nicholas Burrus
January 29, 2024
Presented by Astra Properties LLC
Maximizing Returns: Insider Tips to Successful Short-Term Rentals
By Nicholas Burrus · 01/29/24
Thanks for tuning in to today’s read! Read time for today is roughly 5 mins.
Top of the morning 🫡 🌅
Last year, prospects for the housing market dried up.
It was a tough year.
This year, we are seeing signs that the market is stabilizing
The demand for short-term rentals is surging in 2024 - how can you take advantage of the market and maximize your investments?
We've got some advice for you 💯
Shameless Plug: We launched a community on “Skool” and are excited to build a community of like minded individuals. If you like reading this, we encourage you to join and conversate with us in real time!
Expert Advice for Short-Term Rental Investment Success
Make your investment work harder for more $$$
The housing market is recovering, and for investors out there, you gotta strike while the iron is hot!
And the short-term rental market is getting hotter by the minute 💥
Praise!
Some factors will affect your ROI, of course 😏
But by educating yourself, you'll make better-informed decisions. Make your investments work harder; here are some tips to boost your chances of success:
Location will affect your business decisions
The location will make or break a property's profitability. And we're not just talking about buying a beach house to take advantage of the nightlife or the culture either. It will influence your business decisions.
How?
The kind of potential tenants you'll attract will depend on the location. Often, renters will use the space for location-specific purposes.
A condo in the heart of the city will attract shoppers, while a beach house will attract tourists.
Before investing in a property, figure out the ins and outs of short-term rentals in the area, specifically:
What rules and regulations to navigate
What prospects to target
What attractions and benefits to maximize
Being an Airbnb host is an attractive prospect, but remember: check local regulations and laws before investing in short-term real estate.
Most cities have laws on short-term rentals, and some are banning Airbnb hosting entirely. New York, San Francisco, and some cities in California have strict rules on Airbnb hosting.
Managing a rental has its challenges
A centrally located rental space is very high in demand. With platforms like VRBO, Booking.com, and Airbnb, finding renters has become infinitely easier - that’s another plus!
But here's the thing: it takes more effort to manage a short-term rental than a long-term rental space. Be sure you have what it takes to manage the business well.
Some factors to consider when renting out a space for short-term
- Besides the paperwork and restoring the space in pristine order for the next guests, you have to interact with guests.
- After the guest leaves and the next one arrives, the rental should be cleaned and restored to pristine order.
- Depending on how in-demand the space is, you might only have a couple of hours to tidy up.
- Some factors, like late checkouts, can also affect the timing between guests.
Obviously, property management has its stresses and time pressures, and it's harder for some to do it alone.
If you're not a people person or you can’t fit property management into your schedule, best to hire a professional to take care of these tasks.
Occupancy is unpredictable
Yes, the housing market is recovering, and short-term rental is growing in popularity, but this doesn't guarantee a steady stream of guests.
Some rentals are more in demand than others, so occupancy will fluctuate.
This makes it harder to predict how much you'll earn from short-term rental. This goes especially for short-term vacation rentals - the profit margin is higher than average, but some factors will affect its popularity.
Your goal is to ensure the rental earns a decent return on your investment.
What’s a good ROI?
A property should generate an ROI above 15% 🤑
The 15% should cover the costs of maintaining the property (maintenance, repairs, tax, insurance) + profits.
Although it's hard to tell a property's profitability without a crystal ball, doing due diligence will give you rough estimates.
Factors like the average rental price, location, and amenities near the area directly impact your earnings.
Explore other rentals in the area and check out the prices and in-demand seasons, and you'll figure out the average annual occupancy rates.
At the end of the day, a short-term rental property should take you closer to your investment goal. With these tips, you'll know if investing in short-term rental will be in your best interest.
💫 What Else is Poppin? 💫
AI is More Expensive than Human Workers, MIT Finds 🤖
Looks like AI won't replace humans anytime soon
Workers concerned about bots taking their jobs can rest easy - using AI to replace their human counterparts will be more expensive than expected, according to a report by the Massachusetts Institute of Technology (MIT).
Actual video of a robot going to work
MIT researchers examined whether AI was more cost-effective in 1,000 visually-assisted tasks in 800 occupations. The results are definitely eye-opening:
Researchers found that only 23% of jobs can be automated
AI-assisted visual recognition is not only expensive to install and operate on a business scale, but bots don't do a better job at it
It will take decades before AI becomes better at computer vision tasks than humans
Even with a 20% drop in cost per year, AI will still be expensive and impractical for companies to implement for decades to come
The research covered job roles previously identified as vulnerable to AI, like teachers, researchers, bakers, and property appraisers. These roles require computer vision, something like AI can automate.
Not all of these job roles require computer vision, either. For example, tasks that require visual processing in baking involve checking the ingredients for quality.
That's only 6% of the job.
With no one to cover the rest of the 94%, replacing AI with an actual baker to complete a measly 6% of the tasks is impractical, according to the MIT report.
For now, technology has a long way to go before it can replace human workers in terms of work quality, practicality, and cost-effectiveness. The MIT-led research was backed by IBM Watson AI Lab.
Since generative AI was introduced by OpenAI's ChatGPT in 2022, anxiety about AI taking over the workforce has spread globally. Doesn't help that a 2023 Goldman Sachs report predicted an estimated 18% of the work globally could be affected by generative AI.
As for OpenAI's CEO Sam Altman, he thinks artificial general intelligence (AGI), a hypothesized AI with higher intelligence, will change the worlds and jobs "much less than we think.”
AI Replacing Jobs Statistics
About 3,900 US job losses were linked directly to AI in May 2023
About 4 million industrial robots were employed in 2022
1 in 4 American jobs is highly vulnerable to automation
IT professionals use AI the most in the workplace
77% of businesses are already using or exploring AI
British Telecom aims to replace 10,000 staff with AI within 7 years
75% of Chinese citizens would replace politicians with AI
By 2025, AI could replace 52% of jobs globally
AI was linked to massive layoffs in tech companies like Google, Amazon, and IBM
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