Buying a Short-Term Rental?
Purchasing the Right Home for Short-Term Rentals
Over 70% of Summit County homes are second homes, and many of the second homeowners choose to short-term rent their homes when they aren’t using them.
When buying a home with short-term renting in mind, purchasing a home that meets some essential considerations is important.
We created a list of primary considerations when considering a home for short-term rentals:
Is there a Rental History/Reviews?
If you plan to short-term rent your home, be sure it’s compliant with all regulations.
Let’s review common regulations that need to be considered:
Localities – Does the town allow short-term rentals? In Summit and Park Counties, the towns generally allow short-term rentals. However, there are regulations in most towns for items such as the maximum number of people in a home and safety compliances.
HOA – If you have an interest in a home, be sure to check the HOA covenants and their approach to short-term rentals before you make an offer on the home. The HOA guidelines can vary.
Typically, HOA guidelines for short-term rentals will fall into the categories:
Short-term rentals are fine
Short-term rentals aren’t allowed
Short-term rentals are allowed, but only for periods of at least 30 days or longer
Short-term rentals are allowed, but only for a set number of rentals per year
When your short-term rental is ready to be rented, be sure it’s registered with the town and meets all compliance and safety regulations.
Location is important for short-term rentals. Unless it’s intended to be a “retreat” type setting away from town, convenience is an important consideration.
With every property, there’s a compromise, but for most properties in Summit County, for a good short-term rental, it’s nice to have these nearby:
Restaurants and bars
Summer and Winter equipment rentals options
Near bus route
Near ski lifts (Breckenridge, Keystone, Copper Mountain)
Occupancy - Most town regulations will allow 2 people per bedroom, plus 2 – 4 additional people (depending on the town).
However, it’s a good idea to favor the rule of 4 people per bathroom for a couple of reasons.
First - some HOA Covenants will specify only 4 people per bathroom for rentals.
Second – If we have, for instance, a 2 bedroom, 1 bath home, town regulations will state that between 6 and 8 people can use the rental. However, that’s no fun for the renters; 4 people per bathroom makes for a better user experience.
Kitchen – be sure the kitchen area is large enough to accommodate the occupancy level of the home.
Entertaining / Living area – Confirm this is large enough for the occupancy level of the home. An open kitchen and living area combination are ideal.
Owner’s Closets/Storage – At least one closet can be used or modified for the owner’s items is ideal.
Keyless Entry - A great way not to hassle with keys; they also allow the homeowner to change passcodes and monitor the rental usage.
Strong Internet – No skimping with the strength of the internet signal. For a solid guest experience, be sure to have a strong and capable internet set up that won’t lag when the guests are all trying to get online.
Grills – If the HOA allows grills, be sure to include a quality grill as part of the rental.
It’s not a requirement for the home to have the latest and greatest interior. However, it does need to be in good shape and very clean.
Some homeowners don’t want to rent their homes because they’re afraid of the wear and tear on the home.
We’ve found that homes with frequent short-term usage are often in great condition; they’re well cleaned after every rental, and those renting the homes typically treat the home well.
Is there a Rental History or Reviews?
When a home has been short-term rented, there’s usually a rental history with the home.
A home with good online reviews is always a positive. It may take six months or so for a new short-term rental to build up its reviews, and the reviews are important for those considering whether to rent the home. The home will often have a following of renters who will return to the home the next year while also referring it to other short-term renters.
When considering purchasing a short-term rental, the rental history numbers can be misleading if they’re on the low side. Homes that have been used a fair amount by the owners will automatically have lower rental numbers.
Also, if the short-term rental company hasn’t been marketing to its full potential, it will lower the rental numbers.
If you have any questions regarding short-term rentals or would like additional information about short-term rentals, please contact us.