Short-Term Rental – A Good Business or a Series of Problems?

For years, investing in real estate has been one of the best ways to allocate capital, as entrepreneurs around the world have discovered. More and more people are investing their savings or business capital into purchasing properties and using them for profit, including renting them out short-term.

Short-term rental is not a new practice. Widely known from vacation experiences, it is now simply taking new forms and, for many, becoming a business opportunity.

Several factors are responsible for this, including the rapid development of online platforms and travel apps that perfectly connect supply and demand. Easy access to rental listings worldwide has significantly influenced the expansion of this practice, which is often compared to long-term rentals. The latter is more established and appears to be better regulated legally, making it theoretically safer. Many property owners consider short-term rental, but out of fear of the unknown and alarming stories they come across on industry portals, they choose not to take this path. But is that the right decision? We will try to answer that question in this article.

What Is Short-Term Rental?

Although obvious to many, it is worth clearly drawing the line between short-term and long-term rentals. The easiest way to define short-term rental is as a commercial lease for guests staying in a property for a limited time, without using it as their primary residence. But what counts as “short”? It depends on the form we offer to our guests. Short-term rental can mean renting by the day, in a system similar to a hotel stay. It may be one night, a few nights, or even several weeks. The tenants in this type of rental can be individuals or companies.

Sometimes, short-term rental takes the form of renting out a separated part of one’s property or even sharing the property where the owner lives.

These different models of short-term rentals have both pros and cons, but it is certainly a profitable form of business. The profitability of short-term rentals has opened new markets for real estate investment and income generation. In many cities, professional short-term rentals are already smoothly operated by investors managing multiple properties dedicated exclusively to vacation rentals. Some studies even suggest that the growth of short-term rentals has contributed to a decrease in the supply of long-term rentals. This would confirm the assumption that short-term rental is a solid business idea that continues to attract interest.

Advantages of Short-Term Rental

The arguments in favor of the profitability and benefits of short-term rental can be summarized in a few points:

1. Increased income potential
   Property owners can quickly adjust rates to the current market, increasing their potential revenue.
   
2. Easier regular maintenance
   Short-term tenants stay only a few days or a week, which makes it easier for owners to carry out regular maintenance and avoid costly repairs.
   
3. Greater flexibility
   Investors wishing to sell their property can sign short-term leases, leaving their apartments available if a buyer appears.
   

But is it all that simple? Is this business risk- and problem-free? We’ll explore this in the next section.

The Most Common Problems for Hosts

Just like long-term rental, this type of lease involves risks and requires specific actions to protect owners from problems. The benefits mentioned above are the reasons why most property owners choose this form of rental. However, it is always worth knowing both pros and cons to avoid the latter and enjoy a successful business.

The downsides of short-term rental include:

1. High wear and tear
   This is the most common issue. Damage, dirt, theft, or broken equipment often result from the high turnover of guests. Since tenants don’t tie their future to the property, they may not feel the need to take care of it.
   
2. Irregular income
   Short-term rentals are often seasonal, especially in coastal, mountain, or rural locations. This lack of financial stability can be discouraging, but with proper planning and adjusting one’s lifestyle to the income model, it can still be a profitable business.
   
3. High competition
   While competition indicates that the business is viable, it requires proper marketing, property condition, visibility, and guest service to avoid being pushed out.
   
4. Marketing costs
   Good marketing is essential to ensure steady income and higher profits. Tailored advertising that reaches the right audience is a must.
   
5. Proper equipment
   Guests staying for a few days will not bring items like an iron, fridge, or hairdryer. These must be provided as standard, along with cleaning tools. To stand out, extras such as a toaster, coffee maker, or microwave can make a difference. Owners should also account for the risk of damage or loss of equipment in their operating costs.
   

As we can see, there are drawbacks, but there are also tools and methods to address them.

Troublesome Guests – How to Handle Them?

Among the disadvantages of short-term rental discussed in the previous section, we can distinguish those that are directly dependent on our actions, such as proper marketing and the right attitude toward competition, as well as those seemingly independent, which often become a real nightmare for landlords. Troublesome guests, that’s what we’re talking about – they make a mess, cause damage, make noise, steal… . Are we powerless against this type of behavior? Should we therefore give up in order to avoid problems? No! Absolutely not. Current tools and proven methods allow you to enjoy a successful business. Below are a few tips.

A well-prepared set of rules

This is a point where you must pause for longer. If necessary, use the help of a lawyer. Why is a well-prepared set of rules so important? It is your basis for any claims. It is a document you can refer to at any time, especially in situations requiring confrontation with a dishonest or troublesome tenant. Adapt it fully to your property, its purpose, equipment, as well as any potential regulations of the administration or community to which the property belongs. It is also worth including in it when the apartment must be vacated, where to leave the keys, whether smoking is allowed in the apartment, and from what time quiet hours apply. This will help us avoid possible misunderstandings or abuses by guests.

An appropriate deposit amount

This is important in the case of any property. When setting a deposit, take into account the equipment you provide to guests and the length of time you rent out the property. Clearly set and explain the amount of the deposit in the set of rules mentioned above.

The BedBooking Mobile Calendar

This modern tool is the best friend of short-term rental owners. It helps manage all your properties and communicate with guests. BedBooking’s online booking system is more than a calendar – it’s a full solution for effective short-term rental management. It tracks payments, prepares properties for new arrivals, and supports smooth communication with personalized message templates that include guest names, check-in dates, and rates. Available in 24 languages, it allows you to promote your business worldwide.

If this article has convinced you that short-term rental may be the right choice and answered your doubts, our app can help you manage rentals in a modern and effective way. At BedBooking, we have worked with short-term rental owners for many years, delivering innovative solutions and enabling remote management of rental businesses. Our mobile calendar has helped property owners worldwide open their doors to millions of guests.

Want to learn more about short-term rentals and how our app can support your business? Visit BedBooking and follow our blog and social media.