With the rise of AirBnB and VRBO style sites, many property owners have been turning to the vacation rental niche to start generating 2-3x more profit from spots in high demand.
If this is your first time rolling with a short-term vacation rental property, then there are things you need to know that might otherwise cost you. Most profitable property owners have already gone through these growing pains, but you don’t have to.
The primary things we’ll cover are marketing, customer experience, and legalities.
But first, a few basic Q & A.
Are vacation rentals profitable?
As long as you have everything in place, have a low vacancy rate, and have priced your rental appropriately, you can earn a nice passive income from each property.
On average, a rental property can earn $25,000 – $35,000 annually.
Once you systemize and operate your rental property (or properties) as a business, then you’ll be able to scale it out even further for higher profit gains.
Are vacation rentals a good investment?
We think so.
The reason is because there are various things you can do in real estate, but getting a vacation rental is one way to ensure a positive cash flow.
The challenge is to make sure that you are getting a property that will be in demand.
Some basic research in your area will be able to help determine how other properties are doing with bookings and how they are positioned to the market.
The barrier to entry is a lot less with short-term rental properties, so we encourage you to learn more about using them as revenue streams.
Now, to start with getting your rental property out there…
Marketing your vacation rental
Marketing is the core of every business, and your rental property is no exception.
While there are many different ways to start marketing for potential bookings, these are the primary tips that will get you the most bank for your buck.
This should go without saying, but photography is crucial when it comes to advertising your property.
No matter where you start showcasing, your photos need to be on point. And having a video is even better when you want to stand out.
You want to make sure you have both the interior and exterior covered, as well as the general vicinity around the property.
Get professional photos done with staging (if necessary) and excellent lighting. It would be best to hire a company that specializes in real estate photography.
This is one of those things where you probably don’t want to rely on a smart phone camera.
With your photos and videos, you’re now ready to start putting up listings for your rental.
Sites like AirBnB and VRBO are the go-to when it comes to listing vacation rentals.
The key to making sure your listing gets noticed (and ranks well) is to do your research.
Look up all similar listings in your area to learn how they are structuring their titles, descriptions, and all the extra information they provide.
You can also look at how many bookings they get on average in recent months as well as bookings for future dates to gauge their success/booking rate.
This will give you a great baseline to start fleshing out your listing for writing your descriptions and putting together your info and photos.
With your photos and videos, you’re also now prepared to push ads to your listings.
The two most important platforms to start publishing your ads will be Facebook and Instagram.
The nice thing about these two platforms is that you take advantage of Facebook’s interests and behaviors.
You can start by targeting anyone who is interested in the areas where your property resides, or you can target anyone interested in activities in those areas.
One thing to keep in mind is that AirBnB is going to automatically build Facebook ads to your listings to anyone who has been searching in that area.
The idea here is that you want to start targeting folks who may have not started looking for places to stay just yet, and you want to use different types of headlines.
Let’s say your rental is in Miami — AirBnB ads are likely going to say “Here are some other places to stay in Miami”.
You may want to make your headline: “If you are looking for a great place in Miami with a high walkability score, check out my rental!”
With Ads you’re going to spend a little more money, but there are benefits to doing this.
The first is that, with a new listing, you’re going to start attracting more attention to it.
The second is that you’re going to help get bookings faster that will also get you reviews faster, which are very important for your listing’s success.
Your customer experience
Now that you’re attracting people to your rental, the next most important thing is focusing on their experience.
The experience is one of the major reasons people enjoy rental properties over standard hotel rooms.
It’s important that you begin by greeting each customer after they have booked your rental.
A very nice, hospitable greeting along with clear instructions makes the entire experience so much easier.
It also eases the mind for someone who is totally unfamiliar with your property and area.
You also want to make the best first impression for once they enter your rental.
We suggest having a greeting by the front door along with a reference for everything might need.
This could include nearby restaurants, stores, house rules and information (like wifi), as well contact information.
Anything you can think of that may improve a renter’s stay, you should have it all in the beginning.
You may decide to also take it a step further with some goodies.
These might include things like small candies, water (always valuable), coupons, and snacks.
One way to make your customer experience awesome is by putting effort into the interior design.
Many of the most successful rental properties have focused on a theme.
This might depend on the location the property is based in such as a beach, or something that locals tend to enjoy like a football team.
You can even have different themes per room, depending on how big the home is.
Ultimately, the theme will make it easier for you to decide on decoration, and it will give your guests the experience they want away from home.
Make sure that you provide as much as you can to your guests in terms of convenience.
This includes kitchen items, appliances, and bonuses like water or bathroom supplies.
Anything that you can add becomes a bonus in their eyes.
If your home or complex includes pools or community amenities, then those will also be a value-add for your guests.
Your legal set up and precautions
There are some basic things that you’ll want in place to cover yourself.
This stuff isn’t sexy by any means, but necessary before you start renting to guests.
7. Your legal entity
Make sure that you have an LLC in place before you start renting.
While most folks would say you don’t need a formal entity unless you have more than one property, you have some added protections when you operate under an LLC.
This includes protections against law suits that may try to go after other assets.
Although platforms like AirBnB carry insurance policies for theft or damage, you want to have your own insurance coverage.
Your own insurance plans will be valid no matter what method you use to attract guests to your property.
Additionally, AirBnB is known for trying to use any loophole or trick to get out of paying out on insurance claims.
Because of that, you’ll want to keep yourself covered. Theft and damage to property is very real, especially when alcohol is involved.
9. Rental agreements
Your rental agreement will generally be part of the listing, depending on which platform you use.
But in case you get listings from other sources, you’ll want to have a rental agreement readily available.
Your agreement will cover things like cleaning fees, cancellation fees, damage, theft, house rules, rates, check in/out procedures, pet allowances, things like that.
You want to make sure that your guests are fully aware of everything in the agreement and have clearly signed/agreed to it.
This agreement will help protect your assets, especially if you have to bring in any third parties or insurance claims.
Your long term success…
10. Customer Reviews!
This is the last yet incredibly important point that we want to make.
Reviews from your guests are going to help future prospective guests make a decision on booking with your rental.
Many people filter based on reviews first, and then sort by best to last.
At that point, the number of reviews will actually sell the listing for you.
The key to getting customer reviews is going above and beyond with the experience that your guests will have with your property.
From the greeting to the snacks to the amenities and the communication.
This will set up a long-term profit stream for you with your rental property, bringing you constant cash flow.
Optimizing your rental property
We hope that with these tips you’ll be able to get your rental property set up and optimized to bring in a profitable stream of revenue for you.
An important aspect is to make sure that you continue listening to feedback from your guests and find ways to improve the overall experience.
Check back for more tips on vacation rental properties and ways to market your property in order to stand out in the crowd!