Your Guide to Starting a Condo Short-term Rental Business

The popularity of short-term rentals in condo markets in the Philippines is mainly driven by the rise of booking platforms like Airbnb. These platforms offer unique, often more affordable accommodations compared to traditional hotels. They also provide homeowners with an opportunity to earn extra income by renting out spaces, especially in prime urban locations like Metro Manila, Baguio, Cebu, and Davao.

Short-term rentals are considered a profitable alternative to long-term leasing due to lower maintenance cost and greater flexibility in rental rates. Compared to long-term rentals, short stays are easier on wear and tear and offer owners opportunities to adjust rents more frequently, depending on prevailing rates.

Condos are a preferred accommodation for short-term rentals for their accessibility and lifestyle amenities. DMCI Homes develops resort-style condo communities that suit the accommodation needs of tourists, business travelers and digital nomads. It offers various options to interested condo buyers, including preselling and ready-for occupancy (RFO), rent with preselling, and rent-to-own (RTO).

Short-term rentals, however, are not without challenges. Some argue that these accommodations reduce the supply of long-term housing, leading to higher rents for locals. Some communities also raise concerns about security, noise, and the commercialization of residential areas.

As the market grows, balancing the interests of all stakeholders remains a challenge for owners, homeowners associations (HOAs) and policymakers.

If you are a condo owner weighing your leasing business options or a buyer exploring the benefits of owning a condo, this guide can help you understand the opportunities and challenges of short-term rentals.

Short-term rentals vs. Long-term leasing

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Short-term rentals refer to furnished properties rented out for a short period, typically ranging from a few days to a few weeks. These are commonly listed on platforms like Airbnb and are popular among tourists, business travelers, and remote workers.

Short-term rentals usually last less than six months, while long-term leases are typically for six months or more.

Short-term rentals cater to transient guests who may be tourists, business travelers or digital nomads. Long-term leases provide stable housing for tenants who may be singles, families or retirees.

Short-term rentals offer flexibility with higher nightly rates but fluctuate based on demand while Long-term leases have fixed monthly rents for the duration of the lease contract. The latter offer more security for both landlords and tenants.

Many cities impose different rules on short-term rentals to address zoning, taxation, and community impact, whereas long-term leases follow standard tenancy laws.

In the Philippines, the rise of short-term rentals has transformed the property market, particularly in condo developments, creating both opportunities and regulatory challenges.

Short-term rentals: A preferred choice of condo owners

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Condo owners in the Philippines turn to short-term rentals for several key reasons:

• Supplemental income – Renting out units on a short-term basis often generates higher earnings than long-term leases, especially in prime locations with high tourist or business traveler demand. For instance, an overnight stay in a fully furnished studio unit at DMCI Homes’ Bristle Ridge in Baguio City is for about PHP 3,000 on Agoda. The monthly lease for studio units in Metro Manila, a more expensive city than Baguio, is around PHP 18,000.
• Flexibility – Owners can block off dates for personal use or adjust pricing based on market demand, unlike long-term leases that lock them into fixed rental agreements. You can earn passive income while enjoying your condo unit for several days or weeks in a year.
• Market demand – The growing number of tourists, expatriates, and digital nomads seeking temporary stays creates a steady stream of potential renters. According to work and travel platform Nomad List, the Philippines is the 7th fastest-growing remote work hub in the world, increasing demand for short-term accommodations.
• Avoiding long-term tenant issues – Short-term rentals reduce the risks of dealing with problematic tenants, non-payment, or eviction processes associated with long-term leases.
• Property value appreciation – Some investors use short-term rentals as a strategy to maximize returns while waiting for property values to rise before selling.

While profitable, short-term rentals also come with challenges such as regulatory restrictions, condo management policies, and maintenance costs. These will be discussed in the succeeding sections.

Trends and forecasts on short-term rentals

The short-term rental market in the Philippines has experienced significant growth in recent years, driven by increasing tourism and evolving traveler preferences. In 2019, the country welcomed 8.3 million international tourists, contributing to the rising demand for alternative accommodations.

This upward trend is expected to continue, with projections indicating that the vacation rentals market in the Philippines. As of 2022, the total revenue from these short-term rentals was estimated to reach over $850 million, reflecting a growing trend towards alternative accommodations. The key drivers of growth include tech adoption (the use of booking platforms), changing consumer preferences (hostels/condos vs. traditional hotels), and the rise of remote work.

The surge in short-term rentals has led to a shift from long-term to short-term leasing, affecting the availability of long-term housing and contributing to increased rental prices.

As the market evolves, stakeholders must balance the economic benefits with regulatory considerations and community impacts to ensure sustainable growth.

Short-term rental: Business 101

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Before engaging in short-term rentals, it's important to know the local laws and condo association rules to avoid legal issues and penalties. You should prep your condo well not only to win guests but also to prevent unnecessary compliance issues.

1. Comply with laws and condo rules

Regulations can vary significantly across different cities and municipalities, with local government units (LGUs) often setting specific criteria for permits, zoning, tax compliance, and licensing. You may commission a firm or a professional to assist you with the necessary documentation for your short-term rental. DMCI Leasing offers help in setting up condo owners’ leasing business. You may reach out to the leasing team.

Condo associations may also have their own rules regarding short-term rentals. Some associations implement regulations that restrict rental periods to maintain the building's residential character and ensure the safety and comfort of all residents.

Additionally, operating a short-term rental may trigger various tax obligations, including expanded withholding tax, value added tax and income tax. Property owners should be aware of these potential liabilities and consider consulting with tax professionals to ensure compliance.

By thoroughly understanding and adhering to these legal and regulatory requirements, property owners can responsibly and successfully manage short-term rentals.

2. Create a comfortable and appealing space

Furnishing and decorating your short-term rental thoughtfully is essential to attract guests and ensure a memorable stay. Here are key considerations:

• Functionality - Choose durable, high-quality furniture that can withstand frequent use. Opt for pieces that maximize space and serve multiple purposes, such as sofa beds or extendable tables, to enhance guest comfort and convenience.
• Cleanliness - A spotless and well-maintained property is crucial for making a positive first impression. Regular deep cleaning and decluttering not only appeal to guests but also help in maintaining the property's condition over time.
• Welcoming atmosphere - Create an inviting space by incorporating warm lighting, comfortable textiles, and personal touches like local artwork or thoughtful amenities. These elements make guests feel at home and can lead to positive reviews and repeat bookings.

By focusing on these aspects, you can enhance the appeal of your rental property, leading to higher guest satisfaction and increased occupancy rates.

3. Go the extra mile with extra amenities

Setting up essential amenities in a short-term rental is crucial for guest satisfaction, positive reviews, and repeat bookings. Providing the right amenities enhances comfort, convenience, and overall experience.

Why do essential amenities matter?

• Guest expectations – Travelers expect basic necessities like clean linens, toiletries, and Wi-Fi. Meeting these expectations improves guest satisfaction.
• Competitive advantage – Offering extra amenities like a fully equipped kitchen, streaming services, and workspace options can set your rental apart from others.
• Positive reviews & ratings – Guests are more likely to leave good reviews when they feel their needs are met, leading to higher bookings.
• Operational efficiency – Providing essentials like self-check-in options, laundry facilities, and clear house rules improves guest experience and reduces host workload.

By equipping your rental with the right amenities, you enhance its appeal, improve guest comfort, and maximize your earnings.

4. Be competitive with your pricing and listing

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There are hundreds of short-term rentals on booking platforms and online marketplaces. You can stay competitive with pricing and listing strategies.

Set the price for your short-term rental by regularly analyzing local rental prices and adjusting rates based on demand, seasonality, and competitor pricing. Consider the location, amenities and unique features such as if you offer transport to and from the condo when setting rental rates.

You can also use dynamic pricing tools offered by booking apps such as Airbnb’s Smart Pricing which automatically adjusts rents based on occupancy trends.

To help your listing standout on platforms, here are some tips:

• Use professional photos. High-quality images showcase the space’s best features, making it more appealing to potential guests.
• Write engaging descriptions. Use clear, inviting language to highlight unique selling points, such as scenic views, smart home features, or proximity to key attractions.
• Indicate guest-focused details. Emphasize convenience, comfort, and amenities that enhance the guest experience.

By combining competitive pricing with an eye-catching listing, you increase your chances of securing more bookings and standing out in the short-term rental market.

Condo short-term rental opportunities

What can you expect from leasing out your condo? Sure, it can be a lot of work - with the laws and regulations you need to comply with and the stiff competition for accommodations, but it can be a truly rewarding investment.

1. Potential steady stream of income

In the Philippines, short-term rentals can often yield higher earnings compared to long-term leases. The high demand for accommodation in popular tourist destinations such as Baguio and Cebu help boost rental rates.

Condo owners of short-term rentals can adjust rates based on demand, particularly during peak tourist seasons, allowing them to capitalize on high-demand periods. Conversely, discounts may be offered during lean seasons such as in the rainy months of June to October to help address vacancies.

However, it's important to note that while short-term rentals can generate higher income, they also require more active management and may incur higher operational costs due to frequent tenant turnover. You may consider enrolling your condo unit to a property leasing company to assist with the management of your leasing business.

2. Flexibility to use your condo for personal purposes

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The ability for owners to use their unit for personal stays between rentals is a key advantage of short-term rentals. This flexibility allows property owners to:

• Maximize personal use. Unlike long-term leases, short-term rentals enable owners to stay in their unit whenever it’s not booked, making it ideal for vacation homes or business trips.
• Better maintenance & upkeep. Regular access allows owners to inspect and maintain the property, ensuring it remains in top condition for future guests. This is also easier on wear and tear, bringing down the cost of long-term maintenance.
• Adaptability to market trends. Owners can pause rentals during low-demand periods or when market conditions shift, avoiding long-term tenant commitments. They can also offer discounts and other special offers during lean seasons to help maintain bookings.
• Emergency use. The unit remains available for personal emergencies, family visits, or temporary relocation needs.

This flexibility makes short-term rentals an attractive investment option, balancing income potential with personal convenience.

3. Meet high market demand for flexible accommodations

Thanks to tourists, remote workers and business travelers like event attendees, you have a robust market for your short-term rental. These guests seek flexible stays that offer comfort, convenience, and affordability compared to traditional hotels.

Tourists, especially those traveling in groups, prefer short-term rentals for unique, home-like accommodations in prime locations. Condos for rent are also more affordable than hotels and allow guests to hold gatherings in common amenities.

Moreover, the rise of digital nomads has increased demand for rentals with high-speed Wi-Fi, dedicated workspaces, and extended stay options. Short-term rentals fit these needs perfectly.

Finally, business travelers attending out-of-town meetings, conferences, seminars, and other business events look for accommodations near venues, but for affordable rates.

By catering to these groups with well-equipped, flexible rentals, you can attract a steady stream of guests and maximize occupancy rates.

Key takeaways

Short-term rentals offer a potential steady stream of income from rents. However, there are costs that you need to consider such as in complying with laws and regulations, and in maintaining your condo unit in good condition. There is also stiff competition among other rentals easily accessible via booking platforms. For a successful rental business, here are strategies for you:

• Choose a real estate developer with a track record of delivering quality condo communities. Guests are not only looking for a comfortable bed, but an accommodation with lifestyle amenities.
• Research on the extras that you will offer such as a functional kitchen and complete toiletries to boost your chances of winning guests.
• Hire a property management company that will help you in managing your rental business. For a reasonable fee, you can unload many tasks to professionals.

For more information on starting a rental business, follow or engage with the DMCI Homes Leasing Blog in the comments section or on our other social media pages: Facebook, Twitter, Instagram, and YouTube. You may also download the app on Google Play or App Store.