Short-term rental home: a guide to the right property.

However, the success or failure of such an investment heavily relies on choosing the right property.

Short-term rentals have emerged as a popular alternative to traditional rental arrangements, providing flexibility and convenience for both owners and guests However, the success or failure of such an investment heavily relies on choosing the right property.

In recent years, short-term rentals have become increasingly popular as a new way of renting houses in many cities and tourist hotspots. This practice involves renting out a property for brief stays, and offers greater flexibility compared to traditional long-term rents, finding support in the proliferation of online platforms like Airbnb and HomeToGo.

This trend has sparked extensive debates within real estate and political circles due to its disruptive impact on the long-term rental market and the phenomenon of “overtourism." However, it's undeniable that short-term rentals offer significant advantages for property owners, making the purchase of residential properties for such purposes a savvy real estate investment for many. These benefits include the ability to generate additional income without committing to long-term rental agreements and retaining control over the availability of the property.

But what are the key aspects to consider when seeking a property for short-term rental purposes? Let's delve into this.

What does "short-term rental" mean?

The expression "short-term rental” refers to the practice of renting out a property for periods lasting no more than 30 days. This arrangement differs significantly from long-term renting also in its administrative and tax implications.

Unlike long-term rental contracts, short-term rental agreements are not subject to stamp duty and do not require registration with the Agenzia delle Entrate (the Italian Revenue Agency). However, property owners are required to communicate guest information to the local police station, with hefty fines in case of non-compliance.

Regarding taxation, income derived from short-term rentals can be subject to two distinct methods:

• - under the classic tax system, taxes are levied based on the owner's income bracket. 95% of the income generated by the property is taxable, with a flat-rate deduction of 5%.

• - alternatively, owners may opt for a flat-rate taxation scheme, where the total income generated by the property property is taxed as follows: 21% if it's the first property to be rented out, and 26% for subsequent ones. In case of five or more properties, owners are required to obtain a VAT number due to the activity being classified entrepreneurial.

Starting this year, new obligations have been introduced for short-term rentals. These include the requirement to submit a certified notification of commencement of activity (“SCIA” in Italian) and obtain a National Identification Code (“CIN” in Italian) to facilitate inspections by relevant authorities. Additionally, properties must be equipped with compliant fire extinguishers and safety devices for gas and carbon monoxide detection.

Finding the right property for short-term rentals

Choosing the best property for short-term rentals entails a series of strategic evaluations Not every house is suitable for this type of rental, and there are four key elements to consider in order to make a successful investment in the short-term rental sector.

#1 The Importance of Location

When you're looking to buy a house to rent out, whether it's for long-term tenants or short-term stays, where that house is located is paramount. Conducting Conducting a thorough analysis of the various options and understanding demand dynamics is essential to maximize returns.

Art cities are ideal destinations for this type of real estate investment, as they consistently draw in visitors, ensuring stable demand and potentially high profitability. But don't overlook other options. But don't overlook other options. There are what we call "strategic cities" that may not be as famous, but are are strategically positioned with excellent connectivity to significant destinations. Take Mestre for example - while not as renowned as Venice, it offers easy access to lots of attractions.

Additionally, properties in rural areas like the picturesque countryside of Tuscany can also prove to be a wise investment for short-term rentals, especially if they are close to towns or offer essential amenities nearby Furthermore, "specialized" places like ski resorts, beach towns, or wine regions, though they may experience seasonal fluctuations in visitor numbers, can still yield profitability if managed well. Lastly, there are areas that may not exude glamour but are strategically positioned near hospitals, exhibition centers, major corporations, or industrial zones, thus enjoying consistent demand from professionals, workers, or families visiting loved ones in medical facilities.

Investing in property in these kinds of areas is a pretty safe bet. You can expect an interesting return on the investment every year, and should the need arise to sell the property, finding a buyer should present minimal challenge.

#2 Type of property for short-term rentals

When it comes to short-term rentals, the type of property you choose is crucial. In Italy, short-term rental properties must adhere to specific residential categories, ranging from A1 to A11, with A10 being excluded. Selecting the right one for your target is key.

Speaking of target, rather than aiming for a broad audience, it’s wiser to focus on a specific market niche Specialized platforms Airbtics or AirDna can help in this regard, offering comprehensive insights into particular markets, including property demand and average rental rates

In general, standalone houses with ample space and multiple bedrooms are highly desirable in holiday destinations, catering well to families and groups of friends seeking comfortable accommodations during vacations. Conversely, in art cities, smaller spaces such as studios and one-bedroom apartments hold appeal for travelers seeking convenience and practicality during their stay.

#3 Details Matter

One aspect that is often overlooked concerns the furnishings. Purchasing a house for short-term rentals is only half the battle; the other half is ensuring the space is welcoming, comfortable, and aligned with the target clientele.

t's not about furnishing the house with luxurious items, but rather about creating an environment that is cozy and practical. Neutral colors are recommended for their versatility and ease of maintenance. Incorporating a few plants or modern touches can lend each room its own unique flair, helping your property stand out from the rest.

A well-equipped kitchen is a must-have. Guests will appreciate having everything they need to prepare a meal or brew a cup of coffee. And naturally, maintaining cleanliness throughout is crucial to leaving a positive impression.

Finally, in an era where staying connected is more important than ever, offering additional amenities such as high-speed WiFi and access to streaming services can make a significant difference in how your rental is perceived.

#4 Pay Attention to the Condominium Rules

People looking to buy a unit in an apartment building often wonder if they need approval for short-term rentals. The simple answer is technically no, because renting short-term doesn't change the apartment’s intended use. However, before purchasing a unit with the intention of renting it out on a short-term basis, it is crucial to verify if the regulations of the apartment building include specific provisions regarding this matter.

If there are clauses explicitly prohibiting short-term rentals within the apartment building, and the regulation is of a contractual nature (meaning it was unanimously approved at a flat owners' meeting or directly included in the purchase deed), then compliance is essential and there’s not much one can do against it. However, if the regulation is of an assembly type (meaning it was approved by the majority of flat owners), then proceeding may be possible, as this type of regulation cannot restrict what one can do with their own apartment. On the other hand, if the rules do not address short-term rentals, you may proceed with your plans. It's important to bear in mind, though, that other owners might decide to ban it - but for them to do it, they’d need unanimous agreement among all owners.