While shopping for an investment property, it’s important to remember the key factors that influence the return on investment (ROI) you will get when you rent it out. While there are some things you can do to make a short term rental property more appealing, some aspects of a property are out of your controls. In this article, we discuss key factors that you should carefully take into consideration when purchasing a short term rental property. 

Location 

I feel like I say this often, but the saying “location, location, location” is no cliché! The location of your short term rental is the most important factor to consider when choosing to invest. Location influences the rental rate, property appreciation, and the type of renters your property will draw. For example, if your short term rental is near the beach or on the beach, vacationers are much more likely to rent with you than with someone that has a property that’s 20 minutes away, even if  it is less expensive. People want convenience and will pay for it! 

To make sure you secure a good, long-term investment, look for properties that are close to amenities and popular attractions. Make sure you know what the draw for your property will be, whether it be the beach or a major hospital or university, prior to purchasing. Once you know this, you’ll understand who you’ll be marketing the property to and how to go about it. 

Rental Demand 

Consult with a short term rental management company to determine whether or not there’s a demand in the area where you plan to invest. Even if a particular property seems like it’s in an attractive location that doesn’t mean that people will actually want to rent in that area or that you’ve selected a prime location. Some areas are overly saturated with other short term rentals and/or may not demand a reasonable rental rate. 

Local Economy 

It’s always a good idea to go for properties in areas that are increasing in population, growing in terms of median income, and thrive with tourism. You want to invest in an economy that’s performing well. In cities with plenty of employment opportunities and transience, investors can confidently demand higher rental rates. On the contrary, areas that don’t draw much attention and have a slowing economy should be avoided if you’re seeking an immediate ROI. 

As a wise short term rental investor, you should stay up-to-date on major development plans and be on the lookout for markets where big businesses, hospitals, and universities plan to build. 

Geographical Location 

Be aware of the risks involved with the investment property you choose. Investing in Florida comes with risks of flooding, hurricane damage, termites, etc. Make sure you get a comprehensive inspection on every property you consider and properly prepare for any disaster that may happen in the future. For example, you can prepare an emergency plan, invest in high quality shutters, and reinforce your property with flood-proof materials. 

Property Taxes 

Keep property taxes in mind. One of the main contributors to your property’s profitability is the local area’s tax rate. Florida does not collect a state income tax, but it does collect property tax, which impacts your ROI. To offset taxes, you can raise your rent or deduct rental-related expenses to offset the costs of your property taxes. 

Get Investment Advice from Tigertail Property Management 

Whether you’re planning on investing in Palm Beach or Miami, you can work with our experts at Tigertail Property Management to get the best investment advice. We know the South Florida property market well and can help you maximize your ROI. 

Contact us at 754-301-6296 or send us a message. We can help you find and manage the perfect investment property.