EntertainmentLiving in MontanaMixed useReal Estate in Montanarentals in bozemanvacation rentals January 26, 2021

The Short-Term Rental Market in Bozeman

Sobo Lofts in downtown Bozeman. The HOA allows for short-term vacation rentals.

 

Interior of my short-term rental in Sobo Lofts

The short-term rental market in Bozeman is strong thanks to the mountain setting, college town designation and year-round recreation.

That’s if you can find one. It’s no secret that the Bozeman real estate market is tight right now, with almost no inventory. And with the city’s new zoning map and recently established regulations on short-term rentals, it’s a bit difficult to own and operate one. (You can find information on the city’s rules on short-term rentals here.) I own a short-term vacation rental here in Bozeman and its performance is better than I had anticipated.

Bozeman Compared to More Traditional Resort Destinations

  • My Hawaii rental: I previously owned a short-term vacation rental in Hawaii and it was a much different picture. Cancellations/changes were rare because it took a fair amount of effort to get to Hawaii. Many people were going with family, so guests tended to make air and lodging reservations at the same time and often a year in advance.
  • My Bozeman rental: Reservations here are a little more fluid. There are more cancellations/changes but they almost always fill right back up. In the past few months (before we had any decent snow) I’ve only had five total nights that were open. I am currently looking at several months of being totally booked. Bozeman is a great place to own a short-term rental because of its multilayered economy. Even if the national economy were to take more of a hit than it did last year, Bozeman has a lot to offer in terms of recreation and entertainment at a pretty reasonable price. And unlike Hawaii, Bozeman is reachable by car which ups the affordability factor for visitors.

    Who Is Staying in Short-term Rentals in Bozeman?

    Bozeman is a popular vacation base for skiing, hiking and exploring national parks. It also attracts many people visiting Montana State University. Surprisingly, Bozeman became even more popular during the pandemic. Montana had more space and less restrictions compared to other states, so people headed here in droves to live, work and play.

    What’s Happening in Surrounding Cities?

    • Big Sky Big Sky doesn’t have the same zoning issues because it’s a resort town. But individual HOAs may have their own restrictions. The real issue in Big Sky would be: Is it worth the investment? One should check carefully what units can rent for and compare that to expenses. HOA expenses in Big Sky tend to be much more than Bozeman. And while Bozeman rents year-round, Big Sky definitely has an off-season during the fall and spring.
    • Belgrade This could potentially be a market to look at if the HOAs allow for short-term rentals. The key would be to get a unit that has amenities that Bozeman can’t offer, such as more space with a big yard for pets. There are not a lot of Airbnbs over there, so you would definitely be taking a few guesses. But the  rental market is strong, so a long-term rental should cover expenses if the short-term didn’t work out.

Amenities Make a Difference

A good resource if you’re interested in investing in a short-term rental is AirDNA. If you’re an analytics geek, AirDNA has a goldmine of data on the performance of VRBOs and Airbnbs located all over the world. Check out this great blog post about amenities that boost average daily rates (ADR) and revenue per available rental (RevPar). In Montana, I think these amenities would set you apart:

    • Winter season Fireplace; sun-drenched living area with great views; heated floors; hot tub; glove/boot warmers; espresso/coffee station.
    • Summer season Walking distance to the main entertainment district; a patio with views of the lake/mountains; bikes for riding around town.

If you have questions about owning a short-term rental or what’s happening in real estate in Bozeman, feel free to email me at liz@windermere.com. Also check out my previous blog post about what you should consider before owning a vacation rental.