If you have recently considered starting your own vacation rental business for either a long- or short-term rental, it will be important to have a business plan to maximize your potential earnings. The vacation rental industry is highly competitive and there are a ton of listing sites dedicated to the advertising and promotion of properties.
So how do you beat the competition and ensure your own success when starting a short-term rental business? Here are some tips that will help you get your venture off the ground the right way.
1. Starting a vacation rental business
Once you have decided to earn money by becoming a vacation rental owner you will need to consider some things that go along with renting out your property. Along with short-term rental management costs, there are other items to account for. These can include commissions, fees, and advertising charges. If you have purchased homes to use exclusively as vacation rental properties, they may need repairs, maintenance, or other items to bring them up to a suitable condition.
Your business plan will be invaluable in the early days and will help you prepare and set up your short-term rental business properly. It can include marketing budgets, rental rates, seasonal pricing, and revenue management.
You may also want some vacation rental software to assist you in operating your business. There are bookings to manage, costs and expenses to track. A good short-term rental software package will help you to effectively monitor these items.
2. Advantages of Running a Vacation Rental Business
As with any business, there are good and bad elements that you will encounter, and running a short-term rental is no exception. Some of the pros and cons are:
- Being your own boss
- Determining rental availability to suit your schedule
- Generating recurring income
- May be able to benefit from reduced rental fees (depending on the rental site you are using)
- Can charge higher rates based on amenities or property features
- Fluctuating income can be driven by demand or seasonal changes
- Potential damage to the home by renters
- Costs of repairs and maintenance
- Area competition may reduce the rental rates you can charge
- Building or Housing area rental restrictions
3. Get your property ready to rent
When beginning your vacation rental business one of the major tasks is having your property ‘rental-ready’. This means that it is completely clean, all repairs are done, and the home is in a walk-in condition for your potential guests. Beds and bedding should be immaculate, the kitchen should be fully stocked with plates, pans, cooking utensils and anything else normally needed.
Consider your access options. Visitors will need a key to the property and you will need a way to get it to them. You could meet guests personally and this is always a nice touch. If that is not possible you will need to think about a lockbox or having a property manager meet them at the time of check-in.
4. Assessing rental rates and costs
One of the biggest challenges of running your own vacation rental business is knowing how to price your property correctly. Too high and you won’t get any guests, too low and you will lose out on profits. Luckily with a little research, you can see what similar short-term rental properties in the area are being priced at and set your own rates accordingly.
The market rate will differ when pricing for long- and short-term rentals so make sure you are taking that into account. There are costs to consider when managing vacation rental properties. These may include:
- Cleaning fees
- Advertising costs
- Utility bills
- Property manager fees
- Property listing site fees
5. How to promote your vacation rental property
Making your short-term rental properties appeal to potential renters will take a bit of effort. Once you have advertised your homes on the appropriate listing sites and set your pricing you will need to add a couple more things.
- An accurate and detailed description of the property you are renting will help prospective guests in choosing the home they want to rent. Make the property as appealing as possible by highlighting its selling points, but be honest, don’t make your listing look like a 5 star home if it isn’t.
- Invest in some professional photography. Many a property listing has been let down by badly lit or poor quality pictures. People are visual so some good quality shots of your vacation rental properties will influence your future guests purchasing decision.
When done correctly managing your own short-term rental business can be a lucrative way to make money. Using a comprehensive business plan will keep you on track as well as helping you avoid pitfalls. The time dedicated to preparation will never be wasted and will prevent you from making costly mistakes, meaning you will get to see your profits in a shorter amount of time.
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