If you’re looking to invest in a rental property in Houston, there are two main options to consider: long-term rentals and short-term rentals. While both have their advantages and disadvantages, investing in a short-term rental property can be more profitable in the long run.
Higher Rental Income
Firstly, short-term rentals can generate more rental income than long-term rentals. This is because short-term rentals are typically rented out on a nightly or weekly basis, and can be priced at a premium rate. In contrast, long-term rentals are typically rented out on a monthly basis, and the rent is usually lower. This means that short-term rentals can generate more rental income per day than long-term rentals can per month. Additionally, short-term rentals may also offer more opportunities for revenue through things like cleaning fees and additional charges for amenities.
Secondly, short-term rentals offer more flexibility for the owner. With a long-term rental, the owner is locked into a lease for a fixed period of time, and may not be able to use the property themselves or rent it out to friends and family. With a short-term rental, the owner can use the property themselves or rent it out to friends and family when it’s not being rented out to guests. This can be a great way to offset the costs of owning a second home, and can also make the property more versatile.
Lower Maintenance Costs
Thirdly, short-term rentals tend to require less maintenance than long-term rentals. This is because short-term rental properties are typically cleaned more frequently and have a higher turnover rate of guests, which means that wear and tear is reduced. In contrast, long-term rental properties may require more maintenance and repairs due to longer periods of occupancy. This can lead to higher expenses for the owner, reducing overall profitability.
Houston’s Growing Tourism Industry
Finally, short-term rentals can be a great way to take advantage of Houston’s growing tourism industry. With major attractions such as the Space Center Houston, the Houston Zoo, and the Museum of Fine Arts, Houston is a popular destination for tourists from around the world. By investing in a short-term rental property in Houston, you can tap into this growing market and generate higher rental income than you would with a long-term rental. Additionally, with Houston’s economy on the rise, there is a growing demand for short-term rentals as more people flock to the city for work, events, and entertainment.
In conclusion, investing in a short-term rental property in Houston can be a highly profitable investment. Short-term rentals can generate more rental income, offer greater flexibility for the owner, require less maintenance, and take advantage of Houston’s growing tourism industry. While long-term rentals can also be profitable, the advantages of short-term rentals make them a smart choice for many investors in Houston’s dynamic real estate market.
Personal Case study
The Forest Hide Away
- purchase priced (data from har.com) $236,000
- Estimate furniture and setup cost: $32,000
- Annual gross Rent revenue (data from airdna): $64.500
- Gross Cash on Cash Return: 25%
- Estimate 2023 ARV $315,000
The Cozy Cottage
- Purchase price (data from har.com) $105,000
- Estimating Rehab and furnishing $100,000
- Annual gross Rent revenue (data from airdna): $29.500
- Gross cash on cash return 14.39%
- Estimate 2023 ARV $265,000
- Cash on cash return using BRRR method :infinite