Short-term rentals and long-term rentals are two popular investing strategies, and they come with some key differences that are important to understand. How can you decide which strategy is better for you? That’s the first question I’m answering on today’s show.
On this Q&A edition of Investing in Real Estate, I’m taking three great listener questions. We’ll get into topics like short-term rentals, renting out your primary home, and how to decide which financial product is best for growing your portfolio. Press play to hear my answers to your investing questions!
On this episode you’ll learn:
- How to decide between short-term rentals and long-term rentals.
- What to consider before turning your home into a rental property.
- How to choose the right financial product.
How to Decide Between Short-Term Rentals and Long-Term Rentals
When choosing between short-term rentals and long-term rentals, there’s not a right answer. It’s more about what you prefer, what you have the capacity for, and what you goals are. I’ve found with short-term rentals like Airbnb or VRBO, that it’s crucial to have a system in place.
There are also some key things to consider about your rental market. For instance, should you expect vacancies certain times of the year? Is this a vacation spot? Will the market be desirable to people who are traveling?
Again, there’s no right or wrong answer; it’s all about your preferences. For me, I’m a fan of a long-term strategy. My shortest leases are 6 months. I find it to be more profitable and passive. I like the idea of having long-term tenants who’ve been vetted by a property management company.
What to Consider Before Turning Your Home Into a Rental Property
Should you turn your primary residence into a rental property? It depends. In many scenarios, I find that investors haven’t taken an honest look at the numbers. Ask yourself: am I keeping this property because I have an emotional attachment, or is it truly a strong investment?
I also suggest reaching out to a local property management company. Ask them questions about this city as a rental market. Find out what they think a fair rental rate is on your home, and again, make sure the numbers make sense.
How to Choose the Right Financial Product
Should you use a HELOC or a mortgage to expand your investment portfolio? Choosing the right financial product comes down to the numbers. What has the best rates and terms? Using other people’s money to build your wealth is the way to go. I personally love using lines of credit, especially when you can take advantage of low interest introductory rates.
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DISCLAIMER: I am not a financial adviser. I only express my opinion based on my experience. Your experience may be different. These videos are for educational and inspirational purposes only. Investing of any kind involves risk. While it is possible to minimize risk, your investments are solely your responsibility. It is imperative that you conduct your own research. There is no guarantee of gains or losses on investments.
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