Vacation Rental or Traditional Rental?

[Noelle Saingarm]

Hi all! My husband and I recently bought a second property and were planning to rent out our current home. We live in Bend, OR, a very touristy city where Airbnb/VRBO's are booming. For this reason, our real estate agent brought up the idea of doing this with our property instead of turning it into a traditional rental. I am not as familiar with Airbnb/VRBO, and naturally not as comfortable with it. But I also don't want to rule it out completely and miss a good thing... So I thought I'd run it by everyone here and get some opinions... 

Pros and Cons of vacation rentals I've come up with:

Pros

- Living in a city with year round tourists (home is in a great central location) 

- Potential to make more $$ than a traditional rental

- Less wear and tear on the property (in theory)

- Access to the property weekly to clean/make sure it is being maintained

Cons

- No guarantee of bookings

- Personal time investment to clean after each check out 

- 3% fee charged on every booking from Airbnb (VRBO is even higher) 

I am 50/50 on what route to take here, so any advice is welcome! Thanks! 

-Noelle

[Justin Tahilramani]

@Noelle Saingarm - You are going to need to do an analysis of what your house will bring in if offered as a short term rental. Once you have a good idea - you will need to subtract ALL of the expenses. Its really easy to underestimate the amount of money that goes into a STR. After all, you are responsible for paying all costs associated with the rental. Some of which include:

Debt Service

Insurance (proper STR insurance - not a standard fire policy)

Taxes (both normal property and STR taxes)

Vacancy

CAPEX

Electricity, Cable, Internet

Furniture

Sheets, towels, etc

Cleaning/maintenance 

Gardening/lawn-care

Etc.

Im sure I missed a few - but you get the point. On a SFR - you really need to be able to get a high nightly rate with minimal vacancy in order to make the numbers work. By no means am I saying not to do it - just make sure that you take everything into consideration.