What Must I Do To Launch A Short-Term Rental Business?
I own a portfolio of long-term and vacation rentals The short-term rentals have proven to generate much better income. However, they do require a more watchful eye. There are short-term rentals everywhere. The best ones are near universities, hospitals, tourist attractions, lakefronts, skiing, big cities, and small getaways. Nearly every type of rental is out there!
Not everyone wants to be in the hustle and bustle of the city. City folks want the beach and some peace and quiet. Country folk may want just the opposite. Everyone loves the beach!
If you’re seriously thinking of turning your own place into a short-term rental, here are the main must-do’s to get you on the right footing.
The first step to prepare your vacation home as a rental is to acquire the necessary permits for your state, county or city. This can take a few weeks and may require an inspection. Also, make sure you have proper insurance.
Vacation property managers know all the rules regarding licensing and can help you navigate the process. It’s imperative that you get this completed before you start advertising for rent to avoid any disruptions.
Get Ready for Your Guests
The best way to make your guests comfortable is to place yourself in their shoes. What basics would you expect to have? What nice extras would you like to see? These don’t have to be expensive. Attention to details will go a long way as you build up your reviews and reputation. More on this later.
It’s important that you make the property welcoming and comfortable for your guests. Make sure all appliances work well including the A/C, TV and remote(s).
- 2-3 sets of bed sheets per mattress
- 2 extra pillows & blankets per bedroom
- hangers in the closets
- 3-4 sets of towels per bathroom
- travel-size soaps, shampoo & conditioner in each bathroom
- extra rolls of toilet paper
- supply salt, pepper & sugar
- coffee maker w/ filters
- tea kettle
- coffee mugs
- a variety of pots & pans
- cooking utensils (large spoons, spatulas, knives, etc.
- paper products such as paper towels, napkins, tissue boxes & toilet tissue
- laundry detergent & fabric softener if applicable.
- extra pillows, blanket or comforter per bedroom
- basic cleaning supplies in the kitchen such as all surface spray, dishwashing fluid sponge, dishwasher tabs
- kitchen towels and pot holder
- sofa pillows add a nice touch
Pyrex tableware is almost indestructible and microwavable. Make sure there are enough plates, bowls, cups, etc. Don’t forget sponges and an all-surface cleaner under the sink.
Don’t reuse old or dated furniture in your unit. Your guests come to get away from their everyday lives and it’s your job to make their stay very comfortable. It’s worth the expense to provide newer furniture and appliances.
The best thing is that new appliances often provide warranties and eliminate any immediate worries of repairs for the near future.
Things like soft area rugs, plush sofa pillows and an ottoman are big pluses for your guests. Guests want a place that is typically nicer than what they have at home. So, make sure you give them some of those extra perks.
Make sure you provide wifi access as well as local TV. Instead of expensive cable, consider providing Sling TV and/or Netflix for movies.
Also, if your rental is located in or near a tourist area, be sure to provide a collection of brochures featuring local attractions. I find the best place to grab a bunch in one place is the local tourist information building, nearest rest stop (with amenities) or AAA locations.
If you’re near a beach, make some beach chairs, umbrellas and children’s toys available. Also, talk to local businesses and offer to promote their business to your guests if they are willing to provide them with a discount.
First Impressions Count
The first opportunity you will ever get to capture the interest of potential guests are through your photos. Don’t take pictures with your cell phone! They are terrible.
If you are good with a camera, use a wide-angle lens. If not, hire a professional photographer to take a limited number of photos you can use over and over again for years.
Pay attention to the details. Replace burnt-out lightbulbs, fix the blinds, dust off the ceiling fan blades, make sure your bathroom fan is not clogged up with dust and put in plastic socket protectors for families.
Always keep the place clean and tidy like a hotel room for each and every guest. That includes baseboards, ceiling fan blades and air vents that tend to collect a lot of dust and hair. Also, don’t forget the stove vent filter can get really gross quickly so make it a habit to clean it regularly.
Keep A Watchful Eye
Whether you’ve decided to manage the property yourself or hire a property manager, be sure to always keep tabs on who is in your unit and any questions you can answer.
Not all property managers are quick to answer questions or online inquiries. We once lost a potential client worth $1000 to us because our property manager failed to reply to their inquiry in a timely manner. Don’t let those fall through!
Most property management companies charge around 10%. If you’re looking for a management company that lets you stay 100% hands-off, consider Evolve. They pay all your listing fees, marketing, photographer and more. Keep in mind, they also take over the listing so it no longer comes under your business name. This might be a good alternative if you’re out of state.
The graph below is taken from an article on Evolve’s website. It’s a very good comparison of the major listing sites and how they compare. Click the image to view the article.
If you’re like me and prefer to keep some control over your listings, make sure you also receive instant notifications each time an online inquiry comes in. Be super nice and they will come back again and again. Many of our reviews mention how easy it was to reach us (or our manager) with any issues, questions, etc.
Your Reviews Are Worth Gold
When deciding on where to stay, the first thing we do is check out the reviews.
Apart from price and location, reviews will either boost you to stardom or drop you into the pit of obscurity.
The best thing you can do is to keep track of rental requests and respond to inquiries quickly.
Reviews add trust and provide a first-hand account of a guest’s vacation rental experience. Remember, you are always competing with a slew of other options out there. This is another big opportunity to make a positive impression. Don’t blow it!
Promoting Your Rental
With over 448 million monthly site visitors, Bookingc.om is the largest and one of the most popular vacation booking sites out there. However, they have the highest listing fees and you’ll also be competing with hotel packages offered on the same site. They also require instant bookings.
We had our listings on AirBnB (80 million monthly visitors) and VRBO (40 million monthly visitors) for a while but then dropped the VRBO subscription plan of $499 (plus 3% credit card fee) and went with the 5% booking fee which lets you pay as you go. If you get more than $10K worth of bookings, then the subscription fee is worth it. In case you weren’t aware, HomeAway is owned by VRBO and both of those are owned by Expedia.
Other alternatives you may want to explore are:
How Much Can I Make?
Every rental owner should keep track of expenses, the number of bookings and booking dates per month to determine just how profitable your short-term rental will be.
There are several different vacation rental calculators online and some get really complicated. If you want a simple one, try this one. I take my expenses into account and calculated a daily rate of $42 per night on one of my beachfront rentals. That’s how much I have to make to meet all of my monthly expenses associated with the rental. Considering that the daily average rate in that area is $150/night, that’s pretty good.
Remember to stay competitive! This is a business and you are constantly competing for business. Weekends, that’s Thursday – Sunday, tend to fill up first.
If you see there are a few days left often during the week, consider offering a nice discount for those days to encourage bookings. As long as I am above my break-even daily rate, I’m good. That’s how I see it.
Leave Your Feedback
There’s a lot that goes into running income property and I wasn’t trying to cover it all here. Nonetheless, I hope you were able to learn something new. Feel free to leave your comments and questions to the benefit of other readers below.