Although COVID-19 has had a big impact on the vacation rental industry, there are still ways to grow your business. Now is the time to reflect on your current operations, and think about how you want to grow your overall portfolio.
Below you will find a few tips for expanding your vacation rental inventory:
Tip #1: Have Your Current Properties in Order
Before you expand into more properties, be on top of your current homes. It’s not a smart business decision to take on more than you can manage.
Do you have a good system in place for listing your rental properties?
Is your vacation rental website user friendly and full of helpful information and does it allow multi-property listings?
Does your business show up in search results for vacation rentals?
All of these questions you should already be asking yourself for current business, but it’s also good to review when thinking about an expansion to another area or additional homes.
Aside from pulling in guests, you should also have a good property management system in place. Have your homes been cleaned regularly? Does your exterior and landscaping look welcoming? Have repairs been done in a timely manner and properly? It may seem like these questions are simple, however, your current properties should be in working order before you take on another place.
In addition to your actual properties, how is your vacation rental business doing? Do you have a file of good guest reviews? Is your experience satisfactory for visitors? Are customers finding you by word of mouth? If you have a strong customer base, then you can rely on those reviews when adding on a new vacation rental.
Tip #2: Think About Your Finances
While having your physical structures in order is important, you also need to consider your financial state when acquiring additional vacation home rentals.
Sit down and draw out a budget for each of your current properties to see how much it actually costs to run them per visit or season. Take into account any maintenance costs such as cleaning crews or landscaping services. Think about surprise costs like a new water heater or roof repairs as well. Once you know how much it costs to run your current properties then you have an estimate of what you are taking on with a new home.
Although you may have a number for how much you can spend on buying a new home, you also need to weigh possible adjustments that will need to be made to it. For instance, you may have to update the kitchen or fix code violations.
In addition to quick fixes, consider long-term updates to the home. Is the area going to be changing in the near future? Are you going to have to do additional updates or build on an addition? Also, factor in how quickly you can pay off the mortgage for the home.
Look at other vacation rentals in the area, if possible, to see how much traffic they receive in order to pull an estimate for monthly costs.
Tip #3: Keep Your Eyes on Homes for Sale
Now that you have a good handle on your financial situation, it’s time to find a house for sale. According to a poll from VRM Intel, 34% of investors purchased vacation home properties in a suburb or subdivision followed by 33% purchasing beach area homes. In addition, warm areas like California and Florida tend to be better than cold areas like the Dakotas.
During your search, remember to think about taxes, not only on the home itself but vacation rental fees as well. Look into competition in the area too, as it can indicate if the home might be popular with guests. Find out if the home is located near resources for visitors like places to visit, grocery stores or gas stations. Peek into what makes the area around the home popular with people; this information is useful for gauging if you should buy the home, but can also come in handy when creating a listing on your website when it’s ready to rent.
Tip #4: Get Ready for Business
After purchasing your new vacation rental property, it’s time to get it ready for business. Although this can take anywhere from a few weeks to even a year, depending on the condition of the home, you want to start making money as soon as possible. Pull your team from other locations or devote your time to getting the place ready for guests.
Be sure to tease your new location on social media and your website to build up interest. Showcase unique aspects of your new vacation rental or do a video tour. Just get the word out to start paying off your new investment.
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