How much to charge for short-term rentals?

Question

I'm closing on a fully renovated property on March 4th, and I have someone interested in moving in on March 7th for a short-term lease. They're a family of 5, in the area for work. The house is really beautiful, but it needs probably 5-10 hours of handyman work. I could probably get it done before they move in.

Advantages of the short-term rental idea:

1. I'd be able to start collecting rent only 3 days after closing. That's pretty fast. Otherwise I had been expecting to wait til April 1.

2. I'd be able to get on a better schedule for the next tenant. Rentals in my area turn over mostly in the summer, so a May 1-May 1 lease would be better for me than April 1-April 1.

Disadvantages:

1. I have no idea what to charge them. I was going to rent the house for $1200 long term. I'd expect to charge them more but I'm not sure how much more.

2. It will be a pain in the butt to turn the property over so quickly.

3. The paint and floors are pristine now. I can't imagine they will be after a family of 5 moves in and out.

Thoughts? Am I crazy to consider this? What should I charge them? Anything else I haven't thought of?

Julie Marquez · Answer

My initial thought is to go for it. How short is the short term lease? You will get the house rented right away, and you can charge a premium. Here in Seattle I saw a studio rental going for $995 for a 1 year lease, and $1695 for a 1 month lease. If they aren't going to be there too long, they can't do too much damage. But charge enough to cover the costs to turn over the property, and the damage deposit should cover anything they ruin. As always, do a thorough inspection before and after.

Claire McGuire · Answer

They're saying move in March 7th, move out "end of April, early May." I was thinking if I say yes, I'll stipulate that they have to be out by May 1 and they have to allow me to show the house while they're living there so that I can get it rented for May 1.

Claire McGuire · Answer

Okay! I am duly chastened.

Short-term tenant isn't able to agree to my terms, which is a relief in a way. Telling all other prospective tenants they can see it the day after I close, and that it won't be ready to rent until 2 weeks later. I can easily get the minor repairs done in 2 weeks.

Thanks for the help, everybody!

Marcia Maynard · Answer

Well, you did jump the gun on this. You don't yet own the property. You  haven't yet had access to the property to do necessary  repairs/maintenance. You have already offered the property on the rental  market and have multiple parties interested. You are ready to talk  about terms with the family of five that may be different than what you  advertised.  Hmmm.I imagine in your area of the country there  might be a reason to not have winter vacancies, but I would think places  of good value would rent up quickly spring, summer, or fall. I wouldn't  try to press someone to sign a long-term lease at this juncture.If  you are going to offer a short-term rental, make it month-to-month at a  higher rate. Also, keep in mind that once a tenant moves in, they may  decide to stay longer than you expected, or shorter than you expected,  regardless if it is month-to-month or a longer term lease. That's the  nature of the business.

Claire McGuire · Answer

Well, I'm a bit embarrassed to admit this, but they heard about it because I listed the property for rent a few days ago, even though we don't close til the end of next week. Partly I was just testing the waters by listing it for a slightly higher rent, expecting I might have to drop the price when I'm really ready to rent. The listing went live three days ago and I have had 11 inquiries, including this one.

The husband has a long-term job working for a company in another state, and has been put on a temporary assignment here in this city.

At the moment the thing that makes me the most nervous is they're saying the assignment may be extended. It's one thing to let them move in for two months, which gets me back on a good summer time lease cycle. It's another thing to have them want to extend. I am going to talk to them today and explain that they'd need to either sign a one-year lease at the beginning of the summer, or find another temporary place.

Marcia Maynard · Answer

Finish the maintenance/repair work prior to tenants moving in.

Determine your market niche. Furnished or unfurnished? Short-term or long-term? High-end "A" properties or "B" or "C"?

What is your ideal tenant that you are marketing to? How does this fit in with that?

How did this "family of five" hear about the place? Be wary of someone who drives by and tries to convince you to rent to them before you are ready. Did they come by reputable referral? What kind of work are they doing for only two-three months? Is it a temporary job assignment from a long-term employer? Is it seasonal work?

If you rent short-term, do ask for more rent per month.  It will take you the same amount of work to vet a short-term renter as it would a long-term renter. Keep in mind, damage is proportional to the quality of tenant more than to the length of stay. Collect a sufficient security deposit.

Dana Dunford · Answer

@Claire McGuire- I agree with Julie on the short-term (just this once). Here is why:

• Turnover: The summer has higher demand / turnover. Right now, the market hasn't been showing a lot of demand, and you most likely will have more interest in May / June.
• Increased rent: You should increase the rent to compensate for the shorter duration and flexibility of a month-to-month.
• Handy work: You can set up the contractors (back-to-back) and outline why it's a priority that they finish the work within the given time period. You'll be able to get the 5 - 10 hours completed ... no problem.
• Rent rates (for short-term): I recommend looking on VRBO, corporate housing websites, FlipKey, and other short-term websites to see what rental are going for in your area ... you'll be able to get a better indication of what their alternative options are

I hope that helps!

Oscar Caballero · Answer

Dont have much experience but i would bite the bullet and wait for more permanent tenents. Not worth taking the the risk of bad tenants for a month or two of rent.

How much to charge for short-term rentals?

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