Here’s How to Sell Your Short-Term Rental Property

The process of selling a short-term rental (STR) property starts the minute you come into ownership, as any smart investor will tell you. That’s because it’s not just the property that is for sale, but its reputation, ratings, bookings, and other value-added components.

The successful sale of a short-term rental property involves strategic planning and positioning. As a wise investor, there are a few key steps you should go through when selling your short-term rental property.

1. Prepare the Package

Buyers want maximum convenience, which means a complete package that comes as a turnkey investment. That means doing minor maintenance, cleaning, utilities, and upgrades to the property before the sale.

Then, you will need to bundle up any other components into the package such as marketing channels (social media, website), pending bookings, and automation systems used to manage bookings and reservations.

You can start by preparing a marketing spreadsheet showing the various channels where you get your bookings, the annual income flowing through each, and the URLs of each channel. Do the same for your website and social media channels if you intend to pass them along with the sale.

Take note of other unlisted advantages such as access to social amenities, luxury fittings, and access to local attractions which can all help you boost the STR’s desirability.

2. Prepare the Financials

Potential buyers are investors who want to make money with the property. You can be sure they will do thorough due diligence before going ahead with the purchase, so it makes sense to get ready.

Some documents they might request include bank statements, profit-and-loss statements, tax returns, vendor contracts, and projections for the near future. Additionally, keep on hand utility bills and maintenance receipts going back at least a year as proof of expected operating costs.

3. Set the Right Price

Pricing will be the most important factor when selling your short-term rental property. You don’t want to shortchange yourself or set it so high that nobody wants it. The general advice is that you should have a professional appraiser do it for you, but you can find the correct range using standard methods such as:

• the Sales Comparison Approach (SCA)
• the Capital Asset Pricing Model (CAPM)
• the annual capitalization (or cap) rate
• the cost approach

Aside from professional valuation, it is a smart move to engage the services of a real estate agent who has active experience in the short-term rentals market to help you set the right price for the area.

4. Be Smart With the Listings

If you want to sell on Airbnb, list the expected price there since it’s the most popular platform. You can then list slightly higher prices (10–15% more) on other platforms and see who bites. Make sure to include lots of high-quality photographs and be available to answer questions and to show investors around.

5. Manage Your Bookings While You Sell

You don’t have to pause your bookings because you’re selling. In fact, investors will appreciate the fact that since you already have bookings, they will hit the ground running. What you can do is schedule showings between bookings or leave a day or two each week free.

6. Taxes

Taxes could eat up a significant part of your margin once you sell your short-term rental property. With the right move, you could save yourself a lot in terms of capital gains tax. For example:

• If you intend to use all the money gained and reinvest in a similar property within 45 days and close the buy within 180 days, you can legally defer the capital gains tax as per the 1031 exchange rule.
• You don’t have to pay tax if the property is legally considered your primary residence. However, that means you will have to live in it for at least two years and own it for at least 5 years.
• If you experienced a loss from another investment in the same year, you can subtract the amount from the capital gains before paying tax.

7. Partner With the Right Short-Term Rental Property Agent

No amount of research and planning can substitute for the skills, experience, and knowledge of a property agent who deals in the short-term rentals market. They will help you get your property buyer-ready, prepare the documentation, market your vacation rental, and navigate the various legal and financial processes involved.

Get a reliable STR property agent to handle the sale for you, and cut out much of the associated hurdles.