How does allowing short-term rentals affect the value of an apartment?

Short-term rentals have become increasingly common in many cities, especially in areas with a high number of tourists. For property owners, this can be an opportunity to increase income, but it is important to understand how this type of rental can affect an apartment’s market value. In this article, we explore the factors that can increase or decrease the value of an apartment where short-term rentals are allowed.

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“The option to short-term rent can make an apartment more attractive for investors, especially in areas with strong demand for short-term accommodation.”

Read also: What is short-term rental?

The possibility to rent out an apartment on a short-term basis can make it highly appealing to investors looking to generate additional income. In cities and areas with high tourist activity, this can increase the apartment’s value.

Investing in properties with short-term rental potential is often seen as a smart and profitable strategy, which can drive prices upward. Another advantage is the ability to adjust rental availability based on seasons and demand, making the apartment more attractive to potential buyers.

In Stockholm, apartments account for a significant portion of the short-term rental listings on digital platforms, which highlights the strong demand for this type of accommodation. This demand can make apartments that allow short-term rentals more attractive to buyers, potentially increasing their market value.

For investors, this offers an opportunity to benefit from the growing trend of short-term stays, especially in popular neighborhoods with high tourism. However, it is important to consider local regulations and homeowners’ association rules that may affect the possibility of short-term rental.

Frequent tenant turnover in short-term rentals can lead to increased wear and tear. This may require the owner to perform maintenance and repairs more often than during long-term rentals.

If the apartment’s condition is not maintained properly, it may deteriorate over time, which can negatively impact its market value. It is therefore important to budget for regular maintenance and to check the apartment between stays to ensure that its value is preserved or improved.

More on this: What is considered normal wear and tear in a rental?

The ability to rent out an apartment short-term can affect its market value through its impact on financing options. Some banks and lenders may be restrictive when approving loans for apartments used for short-term rentals, as they may consider it a higher risk.

This can make it more difficult for potential buyers to secure financing, which in turn can reduce demand and lower the price. For this reason, it is important to investigate the rules and conditions set by different lenders before deciding to allow short-term rentals, to ensure that it does not negatively affect the apartment’s value.