Short-term real estate rentals have gained popularity in recent years and seem likely to maintain their appeal. Many travelers and tourists now seek out these properties as a cost-effective and interesting way to secure accommodations for a few days or weeks.

Owning a short-term rental property as an investment is in many ways similar to owning more traditional long-term rentals. In exchange for renting the property, the property owner is paid a fee that covers ownership expenses, and generates a profit. 

Over time, the property increases in value, meaning the owner has both a short-term revenue stream and a long-term appreciating investment. 

short-term rentalBe knowledgeable about short-term rental property ownership

If you’re considering buying a short-term rental property, there are a few things to be aware of to ensure it’s the right move for you. 

Do you want to be a landlord?

Whether your tenants rent for one night, one week or several months, a short-term rental is your property and you’re a landlord.

This means you’ll be responsible for maintenance and repairs. If a furnace breaks down at 2 am, or if a pipe freezes and bursts on a Sunday morning, someone must take the call from the renter and address the situation.

Many owners contract for these services – often through a short-term rental management company – but keep in mind doing so is an expense you will have to build into your rent calculations.

You’ll be dealing with multiple renters

Owners of traditional, longer-term rental properties usually deal with renters for a year or more.

That means screening renters is an occasional task. However, with short-term rentals, you may be dealing with several renters per week. Fortunately, many short-term rental companies screen guests, removing the burden from the property owner. 

Screening renters isn’t failsafe

While short-term rental companies screen renters and clearly communicate that damaging or destroying rental properties and their furnishings is not acceptable and will prevent future rentals, awful situations are often reported.  

When a property is damaged or vandalized, the renter may be forever barred from renting through the company, but the property’s owner is faced with the task of making repairs.

Determining responsibility for property repairs and replacing damaged furnishings or appliances can be unclear, with reimbursements for these repairs known to take some time.

Proper insurance is a must for short-term rentals

Recognizing these potential risks, owners of rental properties – especially short-term rental properties – should secure ample insurance for their property.

Conventional homeowner’s insurance policies are often voided when a property is rented. And while rental companies offer some insurance for property owners, this coverage may not be adequate.

Therefore, it’s necessary to have a straightforward discussion with an insurance agent to learn what is covered, what is not, deductibles, and of course, rates.

Location matters

Your property’s location is an important consideration. Having a condo or vacation home at the beach – and at your disposal when you and your family are in the mood for a beach vacation – is a delightful idea.  And properties in popular cities and locations are naturally in-demand.

However, if your primary residence is 800 miles from that location, you’ll be more dependent on a property management company to ensure the property is cleaned between rentals and that all repairs and maintenance are handled efficiently. Factoring in the property management fee is essential for your rental calculations.

Getting a mortgage for a short-term rental

Securing a mortgage to purchase a rental home can be different from getting a mortgage for a primary residence.

Projected rental income plays a role in the approval process for many lenders. Of course, if a borrower’s income is high enough, their credit rating is high, their current mortgage is up-to-date, and their debt-to-income ratio is excellent, getting approved may be less of a challenge.

With this in mind, working closely with a knowledgeable, experienced  loan officer is the best route. Your loan officer is a professional who will be able to advise you about the factors that go into making a decision about a mortgage for any property, short-term rental included.

Get the service you need; contact a SmartMortgage loan officer

The loan officers at SmartMortgage have exceptional experience in assisting countless buyers with the purchase of their primary residences, vacation homes and rental or investment properties. 

Regardless of your situation, our loan officers will support you from application to closing and are ready to help you. 

Contact us today and get the professional advice and service you need.

Find the right mortgage for you

Contact the experts at

The above information is for educational purposes only. All information, loan programs and interest rates are subject to change without notice. All loans subject to underwriter approval. Terms and conditions apply. Always consult an accountant or tax advisor for full eligibility requirements on tax deduction.