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The Exploding Short Term Rental Market

image001In real estate investing we have always been taught that the most expensive thing in investing is a vacant home. This makes so much sense. Even the restaurant industry has a similar mantra being “The most expensive thing in any restaurant is an empty chair.”

This logic has been turned on its head with the growing segment of real estate investing being short term rentals. With short term rental homes the equation shifts from the measurement of vacancy to dollar cost averaging of the income from each night and how to maximize this aspect. People who would never pay $5000 a month in rent will gladly shell out $166 a night for the same house. The logic behind the math is different for everyone but the idea of paying for convenience seems to be the most common thread that runs the short term rental landscape.

image003Since we are not locked into a contract and we are not forced to show that our credit is worthy of renting the same place for a weekend as we would be if we tried to rent it for a year we are not exposing the home owner to a long term risk and the renter or guest is not subject to the same long term arrangement that traditional real estate contracts are designed to do.

image002Short term rentals are normally associated with either leisure or business travelers. These is a different market segment than a family looking for stability and they both have their benefits and differences for the homeowner. Short term rentals by and large don’t get the same wear and tear as there are less people hours spent in the home. There we go again…it is not vacancy that is the demon but the cost per night being too low and the number of nights being too low.

There is obviously a difference between vacancy on a monthly basis and vacancy on a nightly basis that is made up for on the nights where the home is booked. It is the revenue generated per month that is the driving force of the short term rental market. Of course we want to keep those nights booked but we are less concerned with booking each night and more focused on booking as many nights at the right price.

Michael Urbanski Michael Urbanski (1356 Posts)

Michael Urbanski is a successful entrepreneur with extensive experience online as the CEO/founder of Heavy Hammer since its inception in 1998. Heavy Hammer has several profitable online platforms for local advertising. Michael also owns several patents for geographic advertising online and has numerous other patents in process. Before launching Heavy Hammer in 1999 Michael was the top salesman for foreclosure homes in the state of Maryland. Among his accomplishments Mr. Urbanski has been a decorated Air Traffic Controller in the Air Force, a successful restaurateur and has written and produced several award winning feature films and top tier video games. Leveraging the success of his previous ventures and experiences, Michael self‑financed and launched Heavy Hammer which has been profitable every year of the 12 years it has been in operation.

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