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Pros and Cons of Managing Multiple Short-term Rental Properties
The pros and cons of managing multiple short-term rental properties tracks alongside the standard pros and cons of managing a single short-term rental property. So let’s look at those and then consider them in the context of multiple properties.
Let’s start with the good news.
Your income potential will be higher with short-term rentals because you can charge a higher average nightly rate, including for special events/festivals, etc. With multiple properties that income increases.
The increased income from multiple properties may track with a rise in equity in each of the them. This provides more options for consolidating into a single larger property, or for upgrading the existing properties.
Multiple properties allow you to win multiple spots in search listings, especially if they are clustered in a particular area. They also give you a potential opportunity to relocate guests in case of a power outage or some other maintenance issue in their location.
There’s wonderful upside in managing multiple vacation rental properties. But as many saw recently, there’s also risk that comes with that.
While you do have access to more potential income with multiple vacation rental properties, you also will need to pay more in maintenance. That higher average nightly rate comes with more cleaning turnovers (which we love to help with!) and more potential wear/tear on the property. Even if you use great property management software to simplify your work, you’re still going to have to spend more time to manage more properties.
As some saw in recent travel restrictions and lockdowns, when no guests are coming, even for a short amount of time, that leads to exposure which, depending on how leveraged you are, can lead to a cash flow crisis. But many took the recent pandemic as an opportunity to make adjustments and build up rainy day funds to prepare for future possible challenges.
Municipalities continue to adjust to the reality of vacation rental properties blending in with local neighborhoods and some of those municipalities have taken drastic measures to restrict vacation rentals in general, not just the short-term variety.
This same problem exists with HOAs, something that any potential vacation rental owner would do well to fully investigate, especially if he/she has aspirations to have multiple properties.
It’s said that the best way to predict the future is to create it, and if there are local associations or organizations that are advocates for vacation rental owners or are watchdogs for laws at the state and local level, you might consider joining one (or more) to help out and ensure that income streams you create continue to flow unimpeded, while addressing any legitimate concerns of your friends and neighbors.
Owning multiple vacation rental properties can be really rewarding: you are giving people a chance to have a home-like experience away from home while earning income and building equity for yourself, all while adding to the local economy in hiring cleaners, managers, and handymen. As long as you are clear on the risks involved and have taken measures to mitigate those risks, managing multiple short-term rentals can be an exciting part of your investment portfolio.
This content originally appeared in our twice-monthly Guest Book Newsletter.