Short-Term Rentals Are Gaining Popularity Making Them Excellent Investments

Short-term rentals are experiencing a big boom. Let's explore what's causing this trend, how long it could last, and how it may impact current regulations. Finally, we'll reflect on what this means for your real estate investing business. You might discover that short-term rentals are a lucrative fit for expanding your current real estate portfolio.

Why are tenants and travelers favoring short-term rentals?

It's undeniable that the rise and spread of Covid-19 affected nearly every aspect of life. Parents became home-school teachers overnight. Restaurants and entertainment venues faced restrictions like limitations on the number of guests and social distancing protocols. Businesses scrambled to remain operational while many others were permanently closed. Those that were able made significant adjustments, like transitioning to a work-from-home model for their staff.

The future felt uncertain, so short-term planning became an appropriate response to navigate the challenges we all faced. Long-term leases requiring a commitment often exceeding 24 months did not fit into this new paradigm of the unknown.

Loss of employment caused many people to be displaced and has led to a nomadic shift in the workforce. Further, this has become compounded by an increase in remote work opportunities. Short-term rentals began to gain popularity for the flexibility they offered.

Safety and availability are additional factors adding to the appeal of short-term rentals. They are considered safer than hotels in light of Covid-19. Hotels experience significantly more patrons in comparison, and they have also been used to house travelers during quarantine.

Short-term rentals provide the opportunity for intimate gatherings and help to foster a sense of normalcy in uncertain times when vacation options are limited. Even despite an ongoing pandemic, short-term rentals have continued to enjoy popularity gains.

Will short-term rentals continue to gain popularity?

Some events that occur in history have an effect that permanently reshapes our world, and Covid-19 is no exception.

As Covid-19 lingers on, the expectation is that the workforce will settle into remote positions for the long term. Flexibility remains key.

Also, as businesses realize the benefits of a remote workforce, including lower overhead, increased productivity, and higher morale, employees have been able to experience increased mobility. This freedom of mobility has lead to decentralized lifestyles that make short-term rentals ideal.

Travel may have waned during the pandemic, but industry titan AirBnb anticipates and is preparing for what they have deemed an "unprecedented travel rebound" in leisure, business, and international travel. With reopening efforts underway and Covid-19 restrictions becoming phased out, the future certainly looks bright.

In the meantime, people are more likely to drive than fly, travel more often to less populated areas, and plan for extended stays as businesses delay returning to the office.

The increased popularity of short-term rentals has led to an increase in supply available on the market. Investors are banking on this trend to become the standard. AirDNA presented data in their 2021 U.S. Short-Term Rental Outlook report that highlights increased market demand.

"In Q1 2021, the U.S. hit a record for new bookings each month leading up to April 2021 when demand (nights) surpassed 2019 levels for the first time since February 2020."

And ...

"In April 2021, occupancy for U.S. STRs reached 61.6%, the highest April occupancy level in industry history."

More short-term rentals mean more competition, but rest assured that investors have a range of options for promoting and booking their properties. There are currently over a dozen reputable platforms where you can list properties, including HomeToGo, FlipKey, and VRBO.

It certainly appears as if short-term rental popularity is here to stay.

What's happening with short-term rental regulations?

Local governments and municipalities around the country are reworking their short-term rental regulations to be more favorable for investors. Forecasters predict that these regulatory groups will make it more accessible for homeowners to operate short-term rentals.

Currently, the most stringent regulations are in place in major metropolitan cities. If considering an investment into short-term rentals, be sure to find out what, if any, regulations in your geographic area may apply.

Key takeaways for real estate investors interested in short-term rentals

So now you're wondering if a short-term rental property purchase would be a good opportunity for your real estate investment business.

  • With the increase in bookings and demand, short-term rental properties will be more profitable than ever.
  • As regulations begin to relax, short-term rentals will become easier to operate.
  • Alternative housing models (tiny homes or shipping containers) make great short-term rentals for the open-minded or the adventurous.
  • The opportunities for success in operating a short-term rental property are continuing to expand.

Royal Legal Solutions will help you stay informed of these types of opportunities. But you must have your legal and financial business structures in place before you make significant investments.

We invite you to learn how to achieve bulletproof asset protection through our FREE, 5-part educational series for real estate investors. Request your access to the Royal Academy Asset Protection Vault today.


Last Updated: 
September 22, 2021

Scott Royal Smith is an asset protection attorney and long-time real estate investor. He's on a mission to help fellow investors free their time, protect their assets, and create lasting wealth.

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