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A Guide To Entering And Succeeding In The Vacation Rental Business

Anastasiya Hural5-Minute Read
August 07, 2020

 

Starting out in the vacation rental business is not as difficult as you might think. If you own a property and want to generate some extra income, you can use your home to make money. There are multiple sites where you can advertise your property for rental, many of which offer advice and guidance to help you succeed, as well as keeping you on the right side of legal requirements. These vacation rental tips for owners will help get you started and show you how to make money on your vacation rental property. 

Starting A Vacation Rental Business

As with most businesses, there are many things to do before you start to make money from your investment properties. The vacation rental industry has rules, regulations and requirements that must be met before renting out your home. Running a vacation rental business means that you’re responsible for the safety and well-being of your guests as well as the care and maintenance of the vacation home.

Some things to consider when starting a vacation rental are local regulations and any special requirements of vacation rental listing sites like Airbnb. Vacation rental software packages are available to help property managers. You may select one of them to help manage your vacation rental business.

Be Aware Of Airbnb Legal Requirements

One of the most popular vacation rental listing sites is Airbnb. If you are listing your investment property on its pages, you’ll need to be clear about any legal limitations or restrictions that may be in place for your rental property, region or area. Before listing your vacation rental, you’ll need to ensure that you comply with any necessary legal requirements.

Some things you may encounter are:

 

  • Your city may have restrictions on short term rentals
  • You may need to register, or obtain a permit or license
  • Fines might be imposed for failure to comply
  • Occupancy tax is required and can vary by city

 

Short-term rentals typically yield higher rates than long-term rentals, so while it can be lucrative, it may be subject to stricter controls. Check with your local government, housing authority, and HOA if you have one. You can also consult with a lawyer to ensure that you’re complying correctly with legal regulations.

Competitive Market Analysis For Property Managers

Part of operating a successful vacation rental business is having an effective pricing strategy. Rental income can be maximized by adjusting rates to take advantage of seasonal fluctuations or popular events like games or concerts. While booking duration can be set to a minimum number of days. The goal here is to maximize your rental income without pricing higher than the market can bear.

To calculate your rates, spend time researching prices for comparable properties in your vicinity. A 5-mile radius is a good distance to use. This will give a good indication of what the market will bear. You will need to allow for things like the size of the property, condition, and age of the home to get a base price. Then you can consider charging premium rates for seasonal fluctuations. It can be helpful to create a table for peak and off-peak pricing, as well as midweek and weekend rates for each property as in the example below.

 

 

Property

Peak Season

 

Off-Season

 

 

Midweek

Weekend

Midweek

Weekend

Lime Street

149

215

99

149

6th Ave

175

199

109

159

 

Get Adequate Insurance Coverage

A vacation rental business is not without risk, so you’ll want to make sure that you and your vacation rental are covered for any eventuality. Along with normal loss or damages caused by guests, you will need to ensure protection for unexpected events such as fires or floods. Do your research and obtain adequate insurance coverage as part of your vacation rental management.

Budgeting Income And Expenses

Calculating your income and expenses is essential for managing your vacation rental business. While it’s impossible to foresee every possibility, keeping a good record of income and outgoing funds will help to mitigate any unexpected costs. Along with the day-to-day expenses associated with vacation rental management, it’s helpful to allow a percentage for things like damages or repairs. This is where your vacation rental software can help you organize your accounts and keep tabs on your expenditure and profits.

Don’t Forget Your Taxes

Paying tax is a fact of life, one that can bring heavy penalties if not handled properly. Make sure you’re calculating and allowing for tax payments from your income after offsetting all allowable expenses. Set reminders and alerts to make sure payments are being made on time.

Marketing Your Vacation Rental

Now that the setup and finances are taken care of, you’ll want to market your vacation rental property effectively to generate as many bookings as possible. Here are some suggestions on how to make your vacation rental as appealing as possible to guests.

Find The Best Platform For Your Vacation Rental

There are lots of vacation rental listing sites online. Depending on the area and market that you’re trying to reach, some specific sites may better suit your needs. Check what competitors are doing and research costs and fees for each potential listing site before advertising your rental property.

Create Professional Listings

Standing out from the crowd is an essential part of effectively marketing your investment properties. You do that when you:

 

  • Design eye-catching titles and include specific details of your properties that will entice and appeal to your guests.
  • Give accurate descriptions of the neighborhood and local area and highlight things like nearby attractions.
  • Use professional photography. It cannot be underestimated – and high quality visually appealing pictures will dramatically increase your listings desirability.
  • Are honest when writing your ads and include things like house rules and details such as extra costs or featured discounts. Above all, be truthful in your claims.

How To Reach Your Target Guests

Reaching your audience is half the battle when it comes to running a successful vacation rental business. Getting the word out to as many potential guests as possible is a great way to increase your bookings. Here’s where you can leverage the power of the internet to advertise to a large number of people. Social media, vacation rental forums, influencers, bloggers, and tourist websites can all be used to further increase your listings reach.

Automate And Optimize Routine Processes

Good customer service means attention to detail. To help keep ahead of daily, routine tasks, use your vacation rental software to automate some of the more repetitive duties that come with running such a business. This can include things like managing your listings from different platforms via a single dashboard, optimizing and adjusting your rental prices, scheduling cleaning or routine maintenance, or automating things like guest communication for check-in/checkout and guest reviews.

Conclusion

These vacation rental management tips should help with the effective running and operation of your short-term rental business while helping you to remain competitive in the industry. Along with removing the need for trial and error, this should enable property managers to reach profits sooner.

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    Anastasiya Hural

    The Rocket Homes blog is here to bring you all you need to know about buying, selling and making the most of your home. Whether you’re thinking about becoming a homeowner, selling your current home or looking to keep your place in tip-top shape, our writers and freelancers bring their experience and expertise to meet you right where you are.