Preston, Idaho

Preston, Idaho, a small town located in Bear Lake County, is often characterized by its picturesque landscapes and local amenities that cater predominantly to families and outdoor enthusiasts. The short-term rental sector in Preston is gaining interest, particularly due to its proximity to recreational hotspots such as Bear Lake, which is known for summer water sports and winter activities like snowmobiling and skiing.

With an average daily rate (ADR) sitting at $219, Preston represents a more affordable alternative compared to larger vacation destinations. Its appeal lies in both the natural beauty of the area and its quaint charm, drawing visitors seeking a peaceful retreat. As the tourist demographics evolve, both business and leisure travelers are increasingly exploring Preston for short escapes, indicating a steady and growing demand in the short-term rental market.

To evaluate the short-term rental market effectively, it is essential to focus on various key performance indicators (KPIs):

• Average Daily Rate (ADR): As mentioned, Preston has an ADR of $219, which is competitive when compared to other rural Idaho areas.
• Occupancy Rate: While specific occupancy data can fluctuate, trends indicate an average occupancy rate of approximately 65% to 75% during peak seasons.
• Revenue Per Available Room (RevPAR): With the current ADR and a high occupancy rate, the RevPAR stands around $147.35, presenting a strong revenue stream for property owners.
• Length of Stay: The average length of stay ranges from 2 to 4 nights, highlighting Preston as a viable weekend getaway option.

These KPIs suggest that while not the most lucrative market by metropolitan standards, Preston offers a stable performance within the short-term rental niche.

Over the past decade, Preston has observed fluctuations in both tourism and real estate markets but has experienced gradual growth in the short-term rental sector. Factors contributing to this trend include:

• Increased Awareness: The rise in digital marketing and social media engagement has helped highlight Preston as a desirable vacation location.
• Recreation Investment: The local government has invested in improving public access to outdoor recreational activities, which has attracted more visitors.
• Real Estate Development: New property developments have emerged, catering to the growing demand for short-term accommodations.

Home prices and rental rates have shown consistent upward pressure, with average home values in Preston rising approximately 4-5% annually over the past decade. This trend supports the potential for investors to realize capital appreciation over time.

Investing in short-term rentals in Preston may present a balanced risk-reward ratio. The current ADR of $219 suggests that a property can generate considerable revenue, particularly during peak tourism months. Here’s a simplified breakdown of potential returns:

• Gross Revenue Calculation: Assuming an occupancy rate of 70% over a year, a property generating $219 per night could yield:

  [
  Annual \ Gross \ Revenue = ADR \times Occupancy \ Rate \times Days \ Open
  ]

  [
  Annual \ Gross \ Revenue = $219 \times 0.70 \times 365 \approx $52,897
  ]

• Expenses: Typical short-term rental expenses range between 25% to 35% of gross revenue (including property management fees, maintenance, utilities, and marketing).

• Net Operating Income: Considering a conservative estimate of 30% expenses, the projected net income would be approximately $37,018 annually, translating to a return on investment (ROI) around 10% before financing costs.

Investors should also consider the potential appreciation of the underlying asset, particularly if property values continue to rise in Preston.

Preston experiences distinct seasonal patterns that impact the short-term rental market.

• Summer Season: Peak demand occurs during summer months, particularly June to August, driven by outdoor activities around Bear Lake. This season sees the highest occupancy rates, often exceeding 75%, making it when landlords can maximize rental income.

• Winter Season: The winter months also see an influx of tourists due to skiing and snowmobiling. However, occupancy rates may drop during January and February as many prefer warmer locales for winter vacations.

• Shoulder Seasons: Spring and fall tend to be quieter, with lower occupancy but still viable opportunities for rentals, especially during local events or holidays.

Understanding seasonal fluctuations allows investors to adjust pricing strategies accordingly to optimize occupancy and maximize revenue.

In Preston, various property types perform differently within the short-term rental market:

• Single-Family Homes: These are the most popular choice for families and larger groups, often commanding higher nightly rates. Large homes with multiple bedrooms are particularly desirable during peak seasons.

• Cabins/Vacation Homes: The market has a significant demand for vacation homes or cabins situated near recreation areas, attracting outdoor enthusiasts year-round.

• Condos/Units: While less common, condos closer to the lake and other amenities can attract couples seeking streamlined access to local attractions.

Investors should evaluate the demand for specific property types in their purchasing decisions, as certain styles may yield better occupancy rates or ADRs than others.

Understanding guest preferences helps shape rental strategies. Typical preferences for visitors in Preston include:

• Proximity to Attractions: Properties that offer easy access to nearby recreational activities, dining, and shopping options are favored.

• Modern Amenities: High-speed Wi-Fi, fully equipped kitchens, and in-home entertainment systems are increasingly sought after.

• Unique Experiences: Options providing unique elements such as fire pits, hot tubs, or themed decor can set a listing apart and command higher rentals.

Investors should equip their properties with amenities that enhance guest experience and align with market preferences.

Preston, like many small towns, has localized regulations governing short-term rentals. While these may be less complex than those found in larger urban centers, understanding local ordinances is crucial. Key considerations include:

• Licensing: Owners typically need to apply for a short-term rental permit, which may involve specific safety inspections.

• Zoning Laws: Certain zones may restrict short-term rentals, necessitating careful property selection.

• Taxation: Compliance with local tax obligations, including transient occupancy taxes, is essential to operating legally.

Investors should regularly monitor changes in regulatory environments, as they can evolve based on community feedback and housing market pressures.

Different neighborhoods within Preston offer diverse opportunities for short-term rental investments. Key neighborhoods to consider:

• Downtown Preston: Close to shopping and local attractions, this area has high demand, particularly among guests seeking convenience.

• Bear Lake Area: Properties near the lake can attract tourists year-round, particularly in summer for water activities and winter for snow sports.

• Residential Areas: These areas might provide quieter options for families or longer-term stays, often with lower nightly rates but higher occupancy rates in certain seasons.

Conducting thorough neighborhood analyses helps potential investors identify the best locations for their investment and ensure alignment with target market preferences.

Looking ahead, several trends are likely to influence the short-term rental market in Preston, Idaho:

• Increased Local Tourism Promotions: As more regional and local tourism initiatives develop, expect rising visitor numbers. This could involve more exposure through social media and enhanced marketing from property owners.

• Sustainability Initiatives: As environmental awareness grows, properties that incorporate sustainable practices may attract positive attention from eco-conscious travelers.

• Technological Enhancements: Smart home technology may become a standard expectation among renters; properties offering these features could benefit from enhanced guest experiences.

Investors must stay informed about future developments, as they may present new opportunities or challenges in the short-term rental landscape.