If there were any doubt about the rising popularity of “unique” short-term rentals, Airbnb’s top navigation links to “tree houses,” “tiny homes,” and “omg!” listings should clear it up. These one-of-a-kind rentals are trending, but they come with their own set of challenges. Here's what to consider before transforming your backyard ADU into a pirate ship.
Market Appeal
Unique and quirky properties can be highly attractive to renters and lucrative from a revenue perspective. You likely won’t face much competition for your hobbit house in Tennessee, windmill in Portugal, or yurt in Missouri.
With the right pricing and excellent guest reviews, your unique rental is unlikely to be undercut by another similar property. High-demand unique rentals, like tree houses, can command premium prices compared to standard rentals of the same size and often enjoy higher occupancy rates.
Management Costs
Management costs for unique rentals can vary widely. A tiny house or tree house might have a smaller footprint than a traditional rental, saving you money on acquisition, upkeep, and cleaning. However, unconventional layouts can present heating or cooling challenges that require extra investment or specialized (and expensive) technicians or materials for repairs.
Insurance
Insurance companies may be less enthusiastic about covering your unique property. Without extensive historical data on the risks associated with your type of housing, expect higher insurance rates. This is generally less of an issue for tiny houses but more significant for tree houses, which pose additional safety and liability concerns.
Zoning and Regulations
This is a critical area with significant variability. Regulations for unique rentals differ widely based on location, governed by hyperlocal legislation. Building such a unit from scratch will likely require more time and numerous permits. A simpler route is to buy an existing structure and ensure the previous owner complied with legal requirements or that it’s been grandfathered in.
Final Thoughts
Unique short-term rentals can be very profitable if you’re prepared for the extra costs and maintenance. Just ensure you do thorough underwriting with verified numbers before diving in!
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