I’ve been talking a lot about vacation rentals lately.
No, I haven’t gone out and bought one…yet. But, I want to!
And interesting factoid… Nearly 45 percent of all real estate purchases in the United States are made by people in search of profit. Investing in a short-term rental property is a great way to generate a steady income stream.
There are a lot of positive and negative aspects to short term rentals that you need to get over first.
Pros and Cons of Short Term Rentals
The biggest drawback to short term rentals is the turnover. Every time someone comes in or leaves your building, it causes wear and tear.
So, the constant turnover will increase your maintenance costs.
Another big drawback related to turnover is…you guessed it…vacancy.
Short term rentals are vacant for a significant portion of every year. When you’re not in season, your rental isn’t renting!
But, the offsetting benefit to that is you make way more per day than in standard housing. The increase in income often offsets the additional costs from turnover and vacancy.
Managing Short Term Rentals
With the use of websites like AirBnB, just about anyone can turn a condo or house into a short term rental property. This is a great source of income for many families, and can be for you too!
But, most investors think that managing a short-term rental property is just too much work. The reality is, it’s not easier or harder than any other rental, you just need the right management in place.
There are a lot of options out there, but I’ve recently stumbled upon some software such as Rentbelly, which helps you manage property like this and makes it a lot easier.
The biggest hurdle that you will have to overcome as a short-term rental property owner is keeping enough bookings. This hurdle can be overcome with the development of a comprehensive marketing strategy.
Here are some essential tips for properly managing your short-term rental property.
1. Get a Feel For What’s Happening in Your Local Area
Renting out your property in the offseason can be a bit difficult. The only way to combat the lull that occurs during this low season is by staying up to speed on the events happening in your city. Knowing what events are coming up in your area can help you market your rental to the right audience.
Running targeted Facebook ads is a great way to connect with prospective customers. These ads allow you to target Facebook users based on things like their occupation, location, and age. Once you know what type of event is happening in your area, you can make decisions regarding what type of people may attend this event. With this information, you can fine-tune your Facebook ads and get more bookings.
2. Set the Right Minimum Stay Requirements
Setting the right minimum stay limit is crucial when trying to make money with your short-term rental. Ideally, you will want a higher minimum stay limit. While this may initially deter certain consumers, it will allow you to make more money in the long run.
Accepting a one night booking in the middle of a week can make you miss out on a one week booking later on. Realizing that short-term rental success is a numbers game is your first step to achieving your financial goals. Setting a minimum stay of three to four nights will guarantee that each booking will have a higher value overall.
3. Focus on Keeping Your Property Well-Maintained
In the world of short-term rentals, only the most pristine properties get consistent bookings. This is why you will need to devote time and money into keeping your rental property in good shape. If you are like most property owners, you simply don’t have the time to do this work on your own.
Instead of letting your short-term rental fall into a state of disrepair, you need to hire professionals to perform essential maintenance. With a minimal investment, you can avoid extensive repairs and keep your property booked solid.
4. It’s All About Great Customer Service
If your short-term rental is located in a larger city, chances are there is a lot of competition. Finding a way to set your property apart from competitors is something you need to view as a priority. One of the best ways to do this is by going above and beyond for your guests on a consistent basis.
Anytime a guest calls you with a problem, you need to address it in a timely manner. By providing guests with this type of service, you will be able to get great reviews from them. These reviews are like gold when it comes to attracting new bookings for your property.
If you are unsure about how to properly market your short-term rental, working with professionals is a great idea. They will be able to develop and carry out marketing campaigns on your behalf for a reasonable fee.
Do You Own Any Short Term Rental Property?
I’m curious, if you own any short-term rental property, let me know what you use to manage it and how you handle turnover, maintenance, etc?
Eric Bowlin has 15 years of experience in the real estate industry and is a real estate investor, author, speaker, real estate agent, and coach. He focuses on multifamily, house flipping. and wholesaling and has owned over 470 units of multifamily.
Eric spends his time with his family, growing his businesses, diversifying his income, and teaching others how to achieve financial independence through real estate.
You may have seen Eric on Forbes, Bigger Pockets, Trulia, WiseBread, TheStreet, Inc, The Texan, Dallas Morning News, dozens of podcasts, and many others.