According to a recent article published in REALTOR Magazine, real estate professionals have found their place in the short-term rental trend by helping investors purchase properties they can then rent out by the night to travelers using sites such as Airbnb and VRBO. But there might be another way one can make money off short term rentals. It’s an interesting twist that’s just beginning to emerge: leasing a residence for special events.
It might look like this: A quaint farmhouse with a picturesque barn could be the perfect venue for a country chic wedding; a historic mansion or contemporary penthouse could serve as space for corporate meetings or parties. Few have tried this investment strategy, so it can’t be called a trend. But some say they expect interest in such an investment model to build.
To be sure, one must understand local zoning regulations. You may already know that many municipalities are cracking down on short-term rentals, but there’s more to be aware of when marketing space for special events. In addition to making sure that local ordinances don’t make short term rentals impermissible, one must contend with zoning restrictions, stricter building codes governing commercial property, and local business ordinances. Investors who plan on financing the purchase of an investment property to rent out for special events may have to jump through extra hoops to get lender approval. Be prepared for financing delays. Beside financing delays, be sure to check the restrictions, if any, on insurance.
Know what kind of property works best. A big house with many rooms may work as a meeting space where the agenda calls for small-group sessions. But large, open spaces that can accommodate a crowd are more appropriate for festive dinner parties, galas, or corporate gatherings. Keep parking in mind. Rural and suburban properties are likely to have the acreage necessary for multiple cars and delivery trucks. In the city, you may have to be more creative or limit the size of groups you’re hosting.
Make sure insurance is sufficient. Traditional homeowners insurance won’t cover all the damage and accidents that can occur when you use personal property for commercial purposes. The insurance policy you’ll need depends on the nature of your property use.
Neighborhood pushback can derail the deal. If nearby residents are opposed to residential property being used for commercial purposes in their communities, their collective voices could put an end to an investor’s plans.