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5 Secrets About Short-Term Rentals No One Tells You About
Starting a short-term rental (STR) business is thrilling.
You dream of guests falling in love with your property, glowing five-star reviews, and a steady cash flow that makes your bank account smile.
But hold up—let’s take a reality check. Once you move past the picture-perfect photos and the excitement of booking your first guest, the day-to-day of managing an STR can be more complicated than you imagined.
In collaboration with Baselane, a financial management platform tailored for hosts and real estate investors, here are five secrets every STR host should know but few ever share.
You’ll Know Your Local Hardware Store Very, Very Well
When you begin hosting, you may think your main interactions will be with guests, but soon enough, the local hardware store cashier will feel like family. From leaky faucets to broken lamps and towel racks that refuse to stay up, maintenance issues will come up far more frequently than you expect.
Avoid the temptation to make “emergency” purchases. Instead, create an “oh-no” fund for these small repairs. With Baselane, you can easily set up reserve accounts to cover these unforeseen expenses. And don’t underestimate the value of a friendly local hardware store staff member for tips and advice!
Automation Will Reduce Your Stress Levels You’ll meet a wide variety of guests, from the self-sufficient traveler to the guest who texts you at 3 a.m. about hearing a strange noise. The key to reducing stress is automation. You can set up automated messages for common guest questions, check-ins, and reminders to leave reviews.
Set clear boundaries and automate as many tasks as possible to streamline the guest experience. Apps like Baselane can help you track payments and manage finances with minimal stress, freeing up more time for you to focus on other aspects of hosting.
Your Property’s Decor Will Never Be Safe You may have invested in beautiful decor like vintage vases or handwoven rugs, but if it’s something you truly care about, it should stay far away from your rental. Even the most well-behaved guests can cause accidental damage to furniture or decor.
Choose durable and replaceable furniture and decor. Stage your space with items that look great in photos but won’t break your heart (or your budget) if they need replacing. Baselane’s expense tracking tools can help you manage the costs of replacements without any financial surprises.
People Will Bring Weird Stuff Guests often pack more than the usual vacation essentials. Many hosts have discovered quirky items left behind, from full kitchen appliances to DIY artwork. One host even found a karaoke machine, while another stumbled upon a mini-golf set!
Expect the unexpected and maintain a friendly yet firm approach to your guests’ quirky additions. To avoid confusion, include a clear list in your listing of what is and isn’t provided. And if you’re left with a strange item or two, maybe it’s just part of the unique experience!
Record-Keeping is Your New Best Friend Tracking your income and expenses is crucial to profitability in the STR business, but it doesn’t have to be tedious. With the right tools, you might even start to enjoy it.
Baselane can automate your STR bookkeeping, helping you track expenses and profits effortlessly. You can either open a dedicated business checking account or integrate your existing account. This tool saves you hours every month, providing you with accurate financial statements at the click of a button.
You’ll Have a Love-Hate Relationship With Cleaning While cleaning might seem like a simple task, in the STR world, it’s more of an art form. Maintaining a pristine environment is critical to your guests’ satisfaction, and it’s likely you’ll find yourself spending more time cleaning than you expect.
Hire at least two reliable cleaning services to maintain high standards. Create a checklist to ensure every nook and cranny gets cleaned consistently. And invest in quality cleaning supplies—they’ll pay for themselves through happy guests and positive reviews.
Final Thoughts
Running a short-term rental combines glamour and grit, rewards and challenges. While it’s not all passive income, it’s an exciting journey that offers a chance to learn something new every day. With tools like Baselane, the financial side of hosting becomes more manageable, leaving you with more time to focus on providing the perfect guest experience.
In the previous post: “Is Now a Better Time to Invest in Real Estate Debt or Equity?“
5 Secrets About Short-Term Rentals No One Tells You About
Has the U.S. Housing Market Finally Begun to Thaw After the Pandemic?
It seems like the housing market might be showing signs of life. According to a recent report from Redfin, pending home sales in early October have seen their largest year-over-year rise since 2021, with a 2% increase in the four weeks ending October 6.
This news is likely to be welcomed by real estate investors who have felt the market has offered limited opportunities over the past few years. However, it’s important to take a cautious approach—one promising statistic doesn’t necessarily indicate a broader trend.
Is the Housing Market Truly Recovering?
Let’s explore the different factors at play.
Interest Rate Reductions: A Critical Factor or a Red Herring?
The Redfin report links the surge in pending sales to the Federal Reserve’s much-anticipated rate cut announcement in mid-September. According to Redfin, this announcement prompted buyers to re-enter the market in late September, despite mortgage rates having already been falling for weeks before the cut.
This psychological boost is crucial. Although buyers were aware of the falling rates beforehand, many seemed to be waiting for a formal signal to act. This could be attributed to a lingering fixation on the ultra-low rates of 3% to 4% that buyers enjoyed before 2022.
Any rate cut announcement serves as a nudge for prospective buyers, making them feel that now might be the right time to purchase, even if mortgage rates had been decreasing already. In an unstable mortgage market, such announcements hold significant influence.
However, mortgage rates are just one piece of the puzzle when analyzing housing market performance. As noted by Investopedia, the real estate market is driven by four primary factors: interest rates, demographics, economic conditions, and government policies.
Demographics: Shaping the Market
During the pandemic, demographic shifts had a profound effect on U.S. real estate, with major population movements like the Sunbelt migration fueling booms in cities such as Phoenix and Austin, which later became unaffordable for many.
Age is another key demographic factor, and the millennial generation’s pent-up demand continues to be a driving force behind the rise in home purchases. Despite the challenges of the past few years, millennials who have longed to become homeowners are now entering the market in greater numbers, as more properties become available.
Rising Inventory: A Sign of Stabilization
A key factor contributing to the market’s stabilization is the growth of housing inventory over the last year. The pandemic had a significant impact on the availability of homes, with sellers hesitant to list properties due to COVID-19 restrictions and, later, higher mortgage rates.
Some homeowners, particularly those upgrading to larger homes, found it financially challenging to sell and take on higher mortgages. Others, however, simply chose to wait for a more favorable market.
Although the latest Realtor.com report shows that inventory remains down by 23.2% compared to pre-pandemic levels, we are seeing an upward trend. For instance, new listings have been rising since last year, with a 5.7% year-over-year increase for the four weeks ending October 6.
As of September 2024, some states have even surpassed their pre-pandemic inventory levels, including Tennessee, Texas, and Idaho, with others, like Washington, close behind.
Vulnerabilities in Certain Regions
However, not all regions are showing positive signs. For example, some areas, particularly those affected by extreme weather, have seen inventory spikes not because of market recovery, but due to homeowners trying to offload damaged properties they can’t afford to repair.
For instance, regions like Florida and North Carolina, hit by hurricanes, have experienced increases in home listings, but these may reflect a response to climate-related challenges rather than market health.
Opportunities for Investors
Investors should be discerning when choosing markets, focusing on regions where inventory is growing due to increased home construction rather than climate-related distress. States like Idaho, Utah, North Carolina, and Texas, which are building new homes, offer potential, though caution is needed in areas prone to natural disasters.
The Midwest and Northeast, meanwhile, still face significant challenges in recovering to normal market conditions. These regions have lower rates of new construction, meaning inventory remains scarce, which could present both opportunities and difficulties for investors.
The Bottom Line
The U.S. housing market is showing signs of recovery, but the situation remains complex and varies by region. Interest rates play an essential role in unlocking the market, but investors should also consider other critical factors, such as homebuilding trends, climate risks, and government policies. While the market is heading in the right direction, it’s crucial to examine regional differences carefully before making investment decisions.
In the previous post: “Is Now a Better Time to Invest in Real Estate Debt or Equity?“