Important Things to Consider When Investing in a Rental Property

If you’re thinking about investing in a rental property and joining the rewarding world of hosting travelers, congratulations—you’ve got the right idea for a reliable source of passive income. Once your unit is fully prepped and the guests flock in to avail of extended nightly (or even monthly) stays, you’ll be glad you took the leap.

See also: The Ultimate Guide To Becoming A Landlord or Host.

However, before you can start kicking back and soaking in all that extra revenue, you need to be fully aware of the duties and responsibilities that come with being a rental host. Read on to learn more about the five key considerations that hosts need to make when deciding to invest in a rental property.

Your Financial Projections

Crunching the numbers needed to run a smooth property investment can be challenging, but these are factors that you need to be familiar with when planning your investment.

It’s easy to overlook many of the costs that the average landlord would incur. You’re bound to have a handle on your mortgage, maintenance, utilities, and other regular dues since these are par for the course for any homeowner—but the math runs deeper. Many who are eager to invest in a rental property forget to factor in monthly savings for renovations, administrative fees, and an increase to their taxes and insurance premiums once they list themselves as investors rather than primary occupants.

cartoon of money and a house

Image borrowed from Keeping Current Matters

One welcome exception to this list, should you opt to host extended nightly or monthly stays (which you should) would be the cost of eviction. Since you’re expecting a relatively quick and relatively painless turnover rate for tenants, unforeseen evictions are less likely to happen; and you can always depend on a mediator like 2nd Address to help resolve them, if you’ve opted to have your home listed (which you should).

 These calculations are necessary to determine your overall costing, and they’ll factor into your expected earnings down the line. High overhead costs for maintenance and utilities might hurt your net profits, so take it easy on the disco balls and tropical fish tanks unless you’re sure you can capture a market willing to shoulder the cost.

In the same way, you want to make sure that you have strong contingencies for vacancies (an eventuality for most landlords). If numbers aren’t your strong suit, consult with an accountant; however you play it, it pays off to be prepared for this stage of investing in a rental property.

Your Responsibilities as a Host

As you might imagine, there are a fair number of legal obligations associated with renting out a property –even for short and medium-term tenants. Knowing these inside and out can give you a good sense of what to expect from pursuing an investment in a rental property, and save you a lot of trouble in the legal department.

Most prominent among these are anti-discrimination laws enshrined under the Fair Housing Act, which are generally straightforward. We advise taking care not to ask questions that may be interpreted as discriminatory, and avoiding subjects like ethnicity, religion, and gender identity in their entirety. 

Another responsibility that’s sure to stick around is the need to conduct semi-frequent inspections. Hosts are responsible for ensuring their guests’ safety—be it from common hazards around a living space like damaged stair railings, or from making sure all windows and entryways have functioning locks.

As an important caveat to this point, it bears noting that interactions with guests have become less and less frequent. Since shorter term leases have become the new standard for a high-yield rental model, many of the usual delicate points (such as interviewing tenants) have been replaced with automated processes.

Hosts who list their homes on sites like 2nd Address have little to worry about beyond the need to guarantee safety, since guests are vetted through a comprehensive, digital system.

old lock with scratches

Image borrowed from Angie’s List

Your Guests’ Responsibilities

Naturally, you won’t be managing your hard-won investment in a rental property without some protection by the law. Things can and do go wrong in the life of a host, and our suggestion is to expect the worst and know your guests’ responsibilities.

 Damages to your unit or the furniture and amenities within aren’t a guarantee, but they’re very possible even when hosting the most careful guests—accidents happen, and that’s a fact of life. However, your security deposit insures you for the value of any replacements or repairs that might need doing (contrary to popular belief, you don’t get to keep the leftover balance).

Another common mess that hosts tend to fall into are noise complaints—especially on account of the thriving market for experiential travelers looking for an extended nightly stay (5+ days). As such, you might be pleased to know that in most localities, your guests are also responsible for keeping a respectful level of noise. You also might want to consider posting your local noise ordinances and other important policies somewhere visible in your unit or home to make it easier for your guests to keep themselves in check.

Finally, consult with your lawyer or local administrator on other possible scenarios that might cause you trouble down the line. A professional eye is always the best ally when designing ways to protect your investment in a rental property.

Furniture, Amenities, and Extras

On the subject of leaving things for your guests, you’d be wise to consider drafting a comprehensive list of the different furnishings and fixtures you want to keep around your home or unit to give it character. Nowadays, investing in a rental property means providing a visitor base with an experience –the best-reviewed spaces know how to own a distinct charm.

 You can find an endless assortment of guides to furnishing a home or apartment online. Find a creative vision you like best, and remember that you want to strike a good balance between a making a strong visual impression, and designing a comfortable environment for your guests. 

Opting for amenities like a small library, a wide set of kitchen equipment, and high-speed internet is another way to keep your guests happy and your reputation pristine. As we’ve mentioned, these tend to run up a bit of added cost, so it’s up to you to decide if you can capture the right slice of the market, and how far you’re willing to go to lead the pack.

It also pays to encourage your visitors to lend their own personalities to the unit. One bright idea is to leave some small sheets of paper and a pen next to a bowl, and encourage your guests to leave messages for future visitors. It’s cost efficient, it gives your guests something to Tweet or blog about, and you can easily sift through your collection of notes after each stay to make sure nothing (too) vulgar stays in the bowl.

cozy apartment interiors with reading nook

Image borrowed from Architecture Ideas

Your Neighborhood

Any rental host can provide people with a place to stay, but real success happens comes when a host can show people how to live. Leveraging the immediate surroundings of your rental unit can leave a great impression on guests, and cause your ratings and referrals to skyrocket.

Before you invest in a rental property, ask yourself if your location has more to offer than convenience. Get as familiar as you can with your local restaurants, the local culture scene, local nightlife—really, anything and everything that could lend to your guests’ experiences in your area. Note down parks worth visiting, tranquil spots, and amazing views.

As soon as you’ve mastered your neighborhood and surrounding areas, put together a guide for your guests to browse. Recommend top spots for their various needs, and take all personality types into consideration: wild extroverts, foodies, and the quiet types who prefer a break from the noise of busy living. These small touches are a great way to add personality to your rental space, and appeal to the growing market for experiential travelers.

For one final touch, consider leaving a guestbook where your visitors can leave notes of their travels and their own commentary about the gems you’ve suggested. If you play your cards right, your humble rental unit can become a hub for backpackers, traveling professionals, and nomads of all sorts.


Becoming a landlord or a host takes a good amount of preparation. There’s no way to guarantee the success of an investment, but you can steer the odds well within your favor by considering every angle before dropping a cent. At the end of the day, your foresight will determine whether a rental unit will become a source of passive income, or an active headache.

 Investing in a rental property is a highly rewarding decision for those with the means—especially now that technology makes it possible for people around the world to find quality housing for extended nightly and monthly stays.

Take all the important factors into consideration, then take full advantage of the opportunity while it’s there!

0 comments on “Important Things to Consider When Investing in a Rental Property

Leave a Reply

Your email address will not be published. Required fields are marked *