Look After Your Guests
This is why you exist. Give your guests a memory they will never forget. The perfect stay at ´your´ property. This is the gift that you can give them.
They will love you for it, leave a good review, recommend you to other travellers and might even return!
Even though it is getting more and more difficult to satisfy and ´WOW´ your guests, if you are creative you can still find ways to do this!
These tips will make sure you make the right decision in starting your own vacation rental business. Best of Luck to you!
Your Own Vacation Rental
You do not actually need this, but owning your own vacation rental is actually a great way to start a vacation rental business. Just think about it. You possibly will be even more motivated to rent out your own vacation villa. You will prepare it immaculately, stock the kitchen, do the best, smartest and cheapest marketing to optimise your turnover and profit.
You will soon find out that a Vacation Rental is not really a passive source of income, which gives you the perfect opportunity to offer your services.
You will write down everything you have learned and then apply it to vacation rentals of other owners. That is how we started out as well. First we bought a villa in Spain, then we had a group of friends that also wanted us to rent out theirs. Then friends of friends. And now we offer over 3500 villas, of which most have a private pool, on the Spanish Coast.
It will also help you with the acquisition of other owners. Walk the walk.
Furnishing A Vacation Rental House
Before we show you the steps to start a vacation rental business, there are several items you need to stock up on if you want your guests to feel at home. Some important items include
- General household items
You may not realize it at the initial stage, but it will pay to equip your vacation rental business property with Cable TV, wireless internet, trash cans, hangers, bath mats, and towels. Consumables include toilet paper, hand and bath soap, shampoo, coffee, tea, detergent for kitchen and laundry. Dont also forget to purchase an ironing board and hairdryer.
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Make Up Your Mind On The Pricing
This is a very critical step and has a lot to do with the revenue flow of your vacation rental business both in the short and long term. Bear in mind that the location of your business should influence your rate. More so, it is essential to factor in the cost of the property, the cost of marketing, turnover rate, and maintenance when setting a rate for your property.
There is also one very important thing about this step that you should not forget. Vacation rental businesses are seasonal, and you may have to adjust your pricing strategy based on the season. More so. If there is a particular event or festival that attracts visitors to your location, expect rates to rise.
Things You Need To Know Before Becoming A Vacation Rental Business Owner
Before you become a vacation rental business owner, you have to ask yourself some of the key questions that come up from time to time to find out if this is the right job path for you to take. Here are some of the essentials to keep in mind before you move forward with this type of business.
Understand and Evaluate the Risks
As with anything, it is important that you understand and evaluate the risks involved with becoming a potential business owner and investor. You need to know what it takes to successfully manage your own rental business, as well as the profit and losses that might come with it. You need to have your concerns listed out along with the preventions that align next to them. Take the time to research all avenues and find out if this is something you want to do.
Invest in Security
Ensuring that the safety of all customers is critical. You want to make sure that you know the importance of security at all times, which includes those rentals. The rental that you have isnât your home so you shouldnât treat it as such, it is your business. You should always consider investing in a business security system to protect your profits. This also reduces the chances of working with dishonest guests, as well.
Think of the Consumerâs Needs
Consider Hiring a Third-Party Cleaning Service
Listen to What Consumers are Saying
Keep up on the Trends in the Market
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Vacation Rental Inspection Checklist
Next up, its time to create and review your vacation rental inspection checklist. This will act as a record of the state of your property before its rented to guests. This helps to make sure your property is ready to be used, and also helps assess damages should you need to make a claim to your insurance company after a guest checks out.
This list can include inspecting items such as entry, appliances, electronics, safety measures, furniture, etc.
Luxury Vacation Rental Strategy Ioi: Marketing Is Everything
Vacation rental marketing is a perfect example of an industry where clients have a wide variety of ideas of what it might be.
First, I think its important to start with what successful vacation rental marketing is not.
Its not handing over your keys to a property manager who hasnt proven to you that they are the absolute best at what they do, can get you the absolute most rental income possible for your property, or can build more value and appreciation for your property over the long term.
Its not setting a nightly rate according to a vacation rentals mortgage payments, or fixed expenses, or what similar properties are doing.
It isnt getting a one-day professional photo shoot for $500 and a video slideshow with boring royalty-free music in the background.
Its not just listing your property on a bunch of different booking websites or luxury villa agencies, hoping to maximize visibility.
And it isnt building an independent website and booking engine to get more direct bookings either.
These are just ideas, or tactics. And on their own, are completely useless, even counterproductive.
We have such a deep understanding of our industry that we know its important to start with the clients overall goal, then make sure the business strategy and operation will achieve that goal, and then build a marketing plan based on that strategy.
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Lawn Care / Property Management
If youve ever rented a vacation home, youre probably used to seeing a Cleaning Fee on your bill. Thats typically the cost of someone to clean the house after your stay so that its ready for the next guests . We charge a cleaning fee of $150 per stay because thats precisely what our cleaner charges us. So this cost is a total wash on our end. Zero dollars spent a year, except for a holiday tip )
But outside of the cleaning fee, you may have other regular maintenance costs to keep it ready for each guest. This might be things like lawn care, pool or hot tub service, or even snow-blowing if you host in a wintery destination. We pay a small local landscaping company to mow the yards and blow the outside areas of the duplex on a consistent, reliable schedule. This isnt a year-round cost luckily but since they come more frequently during the spring and summer when everything is growing like crazy, it adds up to about $800/year.
I remember at our last Florida rental there was a pool guy AND a separate lawn crew that came by while we were staying there. Neither were costs he passed along directly to us when we booked, so they came out of his rental profit.
Apply For Licenses And Permits
Common licenses and permits needed before renting your property include a general business license and a short-term rental license.
A general business license is required of any business owner in most states, including short-term rental owners. Meanwhile, a short-term rental license demonstrates that your property is up to code and complies with certain health and safety standards . Youll also need evidence that youre following proper zoning laws and that your adjacent neighbors know youre renting.
Furthermore, some cities require that you obtain a permit before you rent your property. This involves a home inspection and an annual fee.
Your city and state website will have more information on specific license and permit requirements. A legal services provider or an attorney can also advise.
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Set An Acceptable Price
One of the challenges of owning a short term rental property is to find the right rental rate. As an Airbnb host, if you charge too high, itâll scare guests away. On the other hand, charge too low and you may lose money on your bookings or attract the wrong crowd. One mistake that beginner property investors starting a vacation rental business usually make is setting the rental rate based on their financial standing or emotional attachment to the house. Donât do that!
Instead, what you should do is to check comparable properties in your area to find a competitive price that guests will pay and that will make you a profit. Moreover, smart Airbnb hosts use an online real estate investment tool called the Airbnb Profitability Calculator. Among its many uses, this tool provides data for Airbnb rentals like the cap rate, cash on cash return, Airbnb occupancy rate, and expected Airbnb rental income.
As a real estate investor starting a vacation rental business, youâll get this data on the property level AND the neighborhood level. So, youâll be able to analyze and compare various investment properties in your location to see how profitable your Airbnb vacation home rental will be and determine the appropriate rental rate thatâll yield a good return on investment.
Include Luxury Items In Your Vacation Listing
Dont we all love to experience a little more luxury when were on vacation? Spending a little more money upfront to invest in a few luxury amenities for your guests will make a huge difference. Dont worry, we dont want you to break your bank account but here are a few suggestions on items you might want to consider getting for your vacation rental:
- Nespresso coffee machines
- Tempurpedic mattresses
- Stainless steel range stoves, refrigerators, dishwashers and microwaves
Having all of these products in your rental will not only increase your bookings but will give your guests the best vacation experience they can get.
These were our top 7 tips to improve your vacation rental business in 2021! What are you waiting for? Lets go ahead and turn your vacation rental into a place that guests wont want to ever leave. Heres to a great 2021, more bookings, and happy guests!
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Consider Forming A Business Entity
Its important that you treat your short-term rental as a business and form it as such. For instance, to protect your personal assets in the event a guest sues you, consider forming a limited liability company or corporation. These entities also provide certain tax benefits.
You can also add another layer of protection with general business insurance.
Always check with an attorney and insurance broker to determine the best approach for your new business.
What Software Is Available For Vacation Rental Management
The rising expectations of guests coupled with the increasingly complex operations of vacation rental property management makes implementing technological solutions into your business model a must.
Before you open for business, youll want to settle on a reliable software that can help you both facilitate efficient operations, like balancing listings on multiple booking platforms and managing your staff, and deliver quality service and experiences to your guests through automated messages, home automation, custom guidebooks and more.
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How Much Can Vacation Rental Properties Make
One of the first questions those considering getting into this business ask is Are vacation rentals profitable? or How much can a vacation rental make?
The vacation rental business is most certainly profitable, with the industry yielding over $80 million in revenue in 2019 alone. This places the average revenue per user at upwards of $100,000, which can, of course, fluctuate based on the quality of the property, the level of service provided and the efficiency and effectiveness of internal operations.
No matter what kind of property youre marketing, one of the key strategies for maximizing your profit is implementing a dynamic pricing model that reflects dips and rises in demand. This way, your prices will not discourage bookings during low seasons or periods and will invite the most revenue possible when people are most willing to pay.
How Do I Start A Short
There are two main approaches you can when it comes to building a vacation rental business:
Investing in properties of your own
This path requires significant research into market demand and other factors to determine which locations are ripe for investment and will draw a steady flow of guests. It also entails conducting price comparisons to ensure youre getting a fair quote for the property.
Managing properties on behalf of their owners
This option is less demanding when it comes to start-up costs and may be the way to go even just initially if you find yourself lacking the funds necessary to purchase your own units. Still, you will need to put in the work and become extremely well-versed in the operations of vacation rental management if youre going to convince homeowners they should put their keys and revenue streams in your hands.
Once youve decided which of these models to adopt, starting a vacation rental business will require nailing down the specifics, like:
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Vacation Rental Business Plan: Appendix
To keep your vacation rental business plan as neat and tidy as possible, include any supporting documents by way of an appendix.
That will ensure just the most vital information is detailed throughout your plan.
The appendix in your management and business plan can kind of be described like that one drawer you have in your house where you put all your miscellaneous documents you know youll need them someday!
So, in your appendix you should put all of the relevant documents and folders you have for your business, containing the vital information you need to keep things running.
Whats the number for a plumber, just in case I have problems with the pipes?
- Good point, I dont have one!
- Yes, I have one, it is 123 456 7890.
Where are my tax registration details?
- Im not sure, Ill need to look for these and then add them to the appendix.
- I have them, ready to put in the folder.
Have I kept receipts of all of the things purchased for my business recently?
- Yes, and Im ready to add them to my tax records.
- No, I will buy a wallet to keep them in, for future reference.
Have I backed up my online bookings and calendar somewhere?
- Yes, on Dropbox and on an external hard drive.
- Yes, but offline, in my calendar in the kitchen.
The Airbnb Experiment: How I Impulsively Started A Vacation Rental Business
I wonder if
The greatest adventures of my life usually begin with that phrase.
When I say greatest, I dont necessarily mean best. Sometimes I mean weirdest-smelling or insanely-profitable or almost-gave-me-malaria.
- I wonder if I could start my own business
- I wonder if I can really resist ever working for someone else
- I wonder if I can eat this??
The latest I wonder, however, is relatively mild all things considered.
It wont involve cross-country trips or cross-contamination or even cross-dressing. It wont land me on the nightly news. And it wont hold any potential for billionaire profits, but it also offers limited downside.
You see, Im a landlord. I recently finished renovating one of my apartment units.
Pre-renovation, it rented for $700 per month. Post-renovation, I can rent it for about $1,100/month.
But then I started thinking, I wonder if
I could boost my profits by becoming an Airbnb host?And thats how The Airbnb Experiment began.
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Market And List Your Vacation Rental Business
This step cannot be overemphasized. A good marketing strategy will bring more guests to your doorstep. Do everything within your power to promote your business as well as you possibly can. Social media can be very helpful to reach a wider audience and drive traffic. You can also promote it on tourism websites and forums. If you have the available resources, create a website and present the features and uniqueness of your property. Doing so will give your brand a professional outlook.
You can also list the property or sets or properties on platforms like Airbnb, Homeaway, VRBO, and many others. Do this well, and the bookings will flow through in no time.
Build An Online Presence
As a rule, beginners in vacation rental business tend to rely on large platforms. However, their fee policies and requirements to hosts force landlords to operate on their own especially if they own several properties.
To this end, you will need a robust and feature-rich website with must-have features like booking models, review systems, integration with web property listings, etc.
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