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.
Find The Best Str Markets
Good vacation rental businesses can be found in markets with tourist activities and attractions, business hubs, or a combination. Although larger cities are often the first choice for long-term rentals, the best places for vacation rentals can be completely different.
As a recent report from Realtor.com revealed, many of the best places to buy a vacation rental are within a days drive or less of major metropolitan areas:
- Joshua Tree, CA
Dont Pinch Pennies Upfront
When youre just getting started with vacation rental, its tempting to cut corners in an effort to maximize your returns. This often looks like:
- Doing everything yourself so you reap 100% of the business rewards
- Skimping on household upgrades instead of investing in a refresh before guests see your rental property
Frugality might seem like a smart play, but it forces you to work tirelessly to make money with vacation rental. Ultimately, investing in the quality of your home upfront and potentially hiring a vacation rental management company can mean a simpler path to success with more money in your pocket.
In other words, make sure your home has the upgrades that convince travelers to book, hire cleaning and property maintenance partners that keep your home at a five-star level, and partner with a hospitality company to help you pull all the right levers that can maximize your investment.
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Build A Reliable List Of Contractors And Service Providers
As a property owner having a contractor list will come in handy. Build a contractor list of those you can trust and you know will be there promptly when an issue arises. For those who invest in properties outside the country this is especially important as it is not your local language or home and you want to make sure you are hiring the right people at the right price. You always want to make sure they are reliable and will do the job right, the first time. Ask around, you will get answers!
Dont forget, if you need your pool serviced or landscaping taken care of to create a list of service providers. A list of these types of service providers will help you keep your property in order and beautifully maintained especially when you are not there to take care of it yourself.
Create A Business Plan
Hosts should consider their motivations, values, goals, and operations. Then, put together a comprehensive business plan and budget. Consider factors such as:
- Personal income projections to ensure that extra cash is available to keep a vacation rental business afloat during slow periods
- Start-up costs, such as the down payment if the property is financed, business licensing fees, and furnishing and decorating
- Cash reserves for quickly taking care of unexpected repair issues
- Operating expenses, such as host booking fees paid to listing sites, the monthly mortgage on an STR property, taxes and insurance, utilities, supplies for guests, and property management fees
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Is A Rental Property Considered A Business What You Need To Know
- Is A Rental Property Considered A Business? What You Need To Know
If youre a landlord that rents out a single-family home, a large apartment building, or even business space, youve likely wondered if your rental property is considered a business come tax time. Its important to know that there are two classifications when it comes to rental property and taxes. You need to know this information so you can properly get your tax deduction when the time comes.
Below were going to talk about how to know whether or not your property is considered a business, different types of business structures for landlords, and more. Keep on reading to get the most money back come tax time and learn a bit about whether or not your property is a business.
Understand The Rhythm Of Vacation Rentals
Earlier, we touched on the ebbs and flows of demand, which deserves an even closer look. Vacation properties are much different than traditional rentals: the income generated is often dependent on the season. A house near the water will attract more interest in the summer. A house near a ski resort will thrive during the winter months. You need to know what you can expect during both the peak seasons and off months. You also need to have an idea of what the overall monthly expenses will be. You need to factor in that you will have to furnish the property and clean it every few weeks. The homeowners insurance may be increased, and there will be flood insurance if the house is near water. If you plan on buying the property, you will need at least a 25 percent down payment, and you can expect a higher interest rate.
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Prepare A Vacation Rental Agreement And House Rules For Your Home
Having a rental contract from the outset is not only good for you and your guests, but it can also save many headaches down the line. Be sure to include any conditions of the stay and use of your property, along with topics such as cancellation policies or detailed contact information for both parties.
Not sure how to write a vacation rental agreement?
You should also think about preparing a set of house rules to help your guests understand how to use your property correctly. Be sure to include details of how to recycle, any noise restrictions, parking, etc. You could also add instructions on how to use any electrical appliances or other household items to make for a more comfortable stay.
Add To Your Portfolio
When youve mastered your first property, you might be ready to expand your empire to include new properties or new markets. Of course, managing one property is plenty of work, so dont feel any pressure to sign new leases or purchase new assets before youre ready. But once you are ready, youll find that the processes and learnings from your first property often apply to additional properties, so the ramp-up is much easier the second and third time around. Before you know it, youll be running your own homesharing empire.
Now that weve shared the 8 essential steps to launching a vacation rental business, we want to hear from you!
Which step are you most excited about?
Are you going to start laying out your operational plan?
Or maybe youre already brainstorming branding ideas.
Let us know what you think by leaving a comment or sending us a note.
Invest In Smart Home Technology For Your Properties
Havent jumped on the smart-home train yet? Well, its about time that you do so! Smart-home technology devices are a MUST for every vacation rental owner in 2021. Not only are they adding more value to your property , but they serve as a protection for your property, to make managing a vacation rental business so much easier.
Smart locks are a simple way to make your guests life a breeze. They are revolutionizing how property managers and homeowners keep their guests happy. No one has to worry about losing a key again. With smart locks, all our guests have to do is look at their phones and type in the provided key. Its that effortless!
Ever considered using noise monitoring at your property? NoiseAwares noise monitoring sensors allow you to have an insight into the well-being of your property without interfering with your guests privacy. If your guests end up being too loud, NoiseAware allows you to step in from wherever you are, and ensure the safety of your property as well as your community. Learn more about smart-home technology here.
Using Vacation Rental Software
A third option is to manage your rental business using vacation rental software. If you dont have the time to self-manage your rentals but dont want to hire external help, this is the perfect option. Vacation rental software, such as iGMS, uses automation functionality, allowing you to focus on growth and scaling. Using automation, iGMS will take care of:
- Managing all listings from the top OTAs such Airbnb, Vrbo, and Booking.com.
- Importing reservations from other listing sites via iCal.
- Organizing all guest messages into a single feed within a unified inbox.
- Creating message templates and automating your messages.
- Creating guest review templates and automating review send-outs.
- Creating and assigning tasks to your cleaning teams that you can track in real-time.
- Managing direct bookings coming from your business website and other platforms.
- Processing online payments via integration with Stripe.
- Tracking business and payouts with financial reporting tools.
About the Author
Phoebe Gunning is a content writer in the Marketing Department at iGMS. She is passionate about the vacation rental industry, notably helping hosts make the most out of their vacation rental businesses. Some of her hobbies include reading, traveling and drinking a good cup of coffee.
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Depreciation Of Residential Rental Properties
One of the main tax advantages you have when you own a residential rental property, is being able to recover the cost of the property as a capital expense by depreciating the property. This is done by deducting a percentage of the cost every year on your tax returns.
As you can probably guess, this is more popular with people who own mobile homes or apartment buildings. Its important to note that you cant depreciate a primary home, but you can depreciate things that are found inside the rental property that have been there for at least a year. This can include appliances such as refrigerators, microwaves, dishwashers, or even furniture such as couches or entertainment centers.
So, how are you supposed to determine the annual depreciation allowance of your property? Youll need the two things listed below.
You need to know the propertys cost basis. You can find this by adding up the amount you paid for the property, including closing costs and all legal fees and taxes. If during the time youve owned the property youve improved it, whether thats remodeling or adding onto the property, you can add that cost to your tax basis.
The other thing you need to know about is the recovery period. Over time, residential rental properties will depreciate with a recovery period of just over 27 years. For non-residential rental properties, depreciation will take place over nearly 40 years.
A Detailed Business Plan
If you want your business to succeed, take the time to draw up a vacation rental business plan. A well-crafted business plan is the sail of your ship. It can help you identify the strengths, shortcomings, and risks of your business.
Start by identifying the goals of your business in terms of scale and revenue. What targets do you want to hit, and by when? Remember to be realistic with setting dates, as success doesnt happen overnight. List your business assets to assess your current limits and future potential.
Move on to identify the unique selling points of your business. Think about what your rental has that your competitors are lacking. Other things you can include are a financial strategy and an operations management strategy.
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How To Start A Rental Property Business Pick A Niche
After doing your research, your next step would be to pick a target niche.
When learning how to start a rental property business, youâve already made the choice when it comes to the investment strategy that you want to use. However, there aredifferent types of rental properties and different strategies for investing in them.
When learning about the different types of rental properties, you will come across two main types that are very common:
- Long-term rental properties
- Short-term rental properties
Each of these types has its own unique advantages and disadvantages, as they function very differently from one another.
Short-term rentals, in particular, require more research for investing in them due to the complicated laws and rules surrounding them, and how these laws differ from one location to another.
Additionally, there are multiple strategies that you can use for investing in rental properties. For example, you can start a rental property business using your own home or primary residence by renting out a room or a section of your house.
You can also invest in rental properties abroad and rely on professional property management companies to run and manage the properties for you.
Learning as much as you can about these different aspects will help you determine which one you want to focus on, and this type of property or strategy will become your niche.
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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What Is A Vacation Rental Business
Vacation rentals refer to private properties that are rented out short-term to travelers. They are different from hotels in that they generally offer more facilities , privacy and access to local culture.
A vacation rental business involves acquiring, maintaining, marketing and renting out these properties to travelers.
Making Plans For The Future
The vacation rental industry allows a lot of room for change and growth. Thus, it is essential to think about the future of your business and what you can do to expand it further.
Once youve established profitable business and completed your goals, you should have a general idea of what the next steps are. The following are examples of goals you may want to include in your business plan for the future:
- Increasing the occupancy rate
- Providing more amenities
- Optimizing your daily workflow
Once you complete this set of goals, you should think of the next set to secure progress.
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How To Start A Vacation Home Rental Business In Dubai Uae
While Dubai has fared better than many countries during the coronavirus pandemic, there is no question that it has had an impact. Particularly on visitor numbers.
As global vaccination programmes continue at pace, this looks set to change. And we can be hopeful that the year ahead will see a return to the norm for the emirates tourism industry.
Anywhere approaching recent visitor numbers of 15m+ per year will translate into big business for anyone providing accommodation in Dubai. And while this was once a market reserved for large hoteliers, this is no longer the case.
The rise of sites such as Airbnb and HomeAway has empowered anyone with the means to join the vacation home rental industry. And in a travel and trade hotspot like Dubai, the potential returns can be rewarding.
Like any other business here in the UAE, renting vacation properties requires a license. But with the help of a trusted company setup agent, getting one can be fast and affordable.
Get The Rental Property Ready For Guests
After creating a clear business plan, real estate investors can move on to the next step which is to prepare the rental property for guests. Part of being a vacation rental owner means to keep the comfort and convenience of your guestsâ in mind when furnishing the property. This includes providing large scale items as well as everyday items .
When starting a vacation rental business, list the items needed for your rental property. Try going through your entire day and make a list of the items youâd need. Basically, make sure you prepare your vacation home rental in a way that allows guests to feel at home. Your first few tenants will tell you the items they need and, after a few bookings, youâll learn what guests ask for and will be able to predict what they need.
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Property Management Requirements To Grow
If you have your eye on establishing a property management business , you will have a different set of challenges, expectations, and paths to growth. Here are a few things to know.
Driving leads is the way to grow. Earlier in this post, we discussed the three main ways property management companies onboard more homes: buying them, attracting homeowners in need of a manager, and rental arbitrage. If you want to manage for others, you need to drive leads from homeowners. This can be done via word of mouth through real estate agents, or even other local business owners.
Its a balancing act. Property management is all about balancing growth, owner expectations and guest satisfactionall while dealing with both national and local competition. Its tough! Sometimes what the guests seek out in their short-term rental is not the homeowners preference for their second home. To be a successful property manager, you must clearly communicate with your homeowners.
Scaling is a challenge, too. As you grow, youll find the process of scaling elements like guest service, marketing, bookings management, cleanings, and software can be a roadblocks to your success. Overcoming these roadblocks takes a combination of careful decision-making , smart hiring, and tech tools that are designed to help you streamline.
Good luck on the journey!