Are Short-Term Rentals Still Profitable With Rising Interest Rates?

Abstract

As a short-term rental investor, I've been asking if it's still profitable to invest in short-term rentals with rising interest rates? There is a lot of uncertainty in the market right now, and many are asking if certain real estate assets are still profitable with rising interest rates. Case Study: What Doubling Your Interest Rate Could Do To Your Cash Flow The first short-term rental I ever invested in was a 900-square-foot A-Frame that I did a ground-up construction on. The current rate I was operating with stood at 3.25%. After working through the details, my 30-year rate became 4.25%. Unfortunately, it was variable too. I ran the numbers based on the 3.25% rate, the 4.25% rate, and the new 6.9% rate, and even plugged in an 8% interest rate. The difference in the mortgage payment between the original rate I was quoted and the new rate of 6.9% was only $375 extra. As we dip into a period with rising interest rates, short-term rentals will be one of the most resilient real estate investments to rate hikes, making this one of the best times to invest in them. Don't sit on the sidelines and wait for interest rates to drop back to where they were over the past two years.