One of the latest trends in the real estate market in Kingston is the short term rentals of furnished apartments with prices quoted in US dollars. By “short-term” we mean occupancy of a night to a month. The trend seems to have picked up in the past year or two, as an increasing number of landlords discover what seems to be a lucrative source of rentals. Why is this happening? Should you get in on the market? Here are some important facts you should know about this short term rental market in Kingston.
Short Term Versus Long Term
Omar, a customer service supervisor at a Kingston bank, decided to buy his first revenue property earlier this year. I found him a unit in a quiet complex along the Constant Spring corridor, one of the main thoroughfares in the heart of uptown Kingston. Omar’s plans to do short-term rentals instead of long term leasing after he refurbishes the unit.. As Omar and I sat down, he recited the calculations that were playing through his head. “With a minimum nightly rate of US$75 and a monthly occupancy of 50 percent”, he said, “I would end up with approximately US$1125 rental income per month”, he mused. Were Omar’s apartment to be rented on a long term basis he would fetch a maximum of US$480 per month.
After an initial investment in furniture, bed, and bath linen, Omar’s additional monthly expenses for his short term rental would include electricity, cleaning wages, and household supplies. After expenses, he would net US$740, or US$305 more than a long term rental arrangement.
Steady Market Demand
Demand for long term rental is, and will remain high for a long time. But the demand for short term rental is growing fast. Non-resident Jamaicans make up a large share of this market as many of them return home to do business, spending upward of six weeks at a time. The short term rental owners with whom I spoke confirmed that word-of-mouth recommendations from satisfied customers have been their best advertising. As the city of Kingston continues to grow as a business and vacation destination, the demand for short term rental will continue to increase and become more lucrative.
Regulations and Customer Service
Before you consider getting into the short term rental market you should be aware of regulations regarding registration with the Jamaica Tourist Board, requirements pertaining to the security of the premises and the amount of public liability insurance coverage you will need. If you are managing the operation yourself, the demand on your time may be greater than if you had long term tenants. You will need to do more frequent inspections of the property, attend to more details when guests check in and depart.
With careful planning and sound management, a short term rental business can earn attractive rental income. However, the final decision will depend on your assessment of what will be best suited to your location, your knowledge of each market and what service you ultimately wish to provide.