Starting a vacation rental business
It is always exciting to start new endeavors that provide you with a way to make money and really enjoy what you’re doing. If you are ready to start making people’s vacation dreams come true for a living, starting a vacation rental business is the way to do it. It’s an exciting venture, with opportunities to meet new people, learn new things and make money! Thought of as an investment, having vacation rental properties provides anyone with a way to stretch out and really enjoy working with not only properties but also people.
With any new business venture, there’s plenty that needs to be done prior to launching a business like this one. It’s an exciting venture, with opportunities to meet new people, learn new things and make money! Buying the properties, fixing them up and getting them ready to rent for vacation are just some of the tasks. It can take a bit of time, but once you have gone through the available options, you’re able to move ahead and actually enjoy being able to provide vacation rental properties to those visiting the area. Whether you’ve managed your own vacation rental before or you’re new to the game, you’re in for a ride! Before you jump in, take a minute to read this guide to ensure you’re set up for success!
What you need to know before starting a vacation rental business
Starting a vacation rental business is no small feat, and comes with its own unique set of good and not-so-good things to consider. There are pros and cons to everything you do and owning a vacation rental business is no exception. Being able to know these pros and cons can prepare you for the day when it comes to renting to someone and being able to provide them with the rentals that they want to stay in and that they recommend to others.
There are pros to short term vacation rentals such as:
- Being able to rent to multiple people within the same year.
- Vacation rentals typically see less wear and tear than long-term rentals, which means you may spend less time money on maintenance and repairs.
- The recurring revenue is a definite plus. During peak seasons you can have back to back reservations paying your top rental prices. This additional income is a significant perk of owning a vacation rental business.
- They give more flexibility and tax breaks than long term rentals are able to do.
These advantages provide the business owner with a way to know that they’re making the right decision to invest in this type of vacation rental business.
Of course, there are not just benefits to owning vacation rental properties. They also come with cons, as well.
- There is no guarantee that someone is going to rent your property, so you might not make as much on certain rentals.
- Homes require routine upgrades and maintenance, and these can get pricey.
- There can be too many things to manage.
- Competition is serious. You have to be dedicated to staying relevant, to being creative in your marketing, and to provide excellent customer service 100% of the time.
- Nightmare guests. You’ll get a few of them, and they’ll make you question why you got into this business in the first place. They’re few and far between, but they can make things difficult.
However, either way, you choose to go, it is important to note that it is not a hard industry to get into, but it is definitely one you have to be smart about. You never want to jump into something without knowing both sides of the coin. This is where you have to weigh up if the cons are something you can handle because the pros definitely make this a worthwhile investment.
How to start a vacation rental business
Before you start a vacation rental business, it is important to know what you’re going to do and how you’re going to get there. Jumping in and getting in over your head are common things that happen. First and foremost, you need to have a business plan first which outlines what you want to do and your goals. You will then need professional photos of the property, you need to list those photos on a great website and other portals. Make sure that you open up reviews for your rental and charge the appropriate going rates.
The rental that you’re putting out there has to be in good shape. Depending on the property that you chose to purchase, this might be something you have to put a little elbow grease into or it might be something that doesn’t need to be done at all.
There are so many things that you have to take into consideration when it comes to owning a vacation rental business, but it is a very lucrative and profitable business to get into in the long run. You just have to make sure to stick with it and keep to making the properties better. When you do this, you’re able to succeed and provide those that come to visit with a way to enjoy their stay and let everyone they know learn more about it.
What you need to start a vacation rental business
You need a business plan. One of the biggest reasons new property managers fail is that they don’t run their vacation rental like a business. Sitting down and creating a solid business plan will help you get your ideas and expectations down on paper instead of swirling around in your head (or in the notes section of your phone) Along with a business plan you’ll need:
- An operations plan
- Marketing plan and
- Financial plan/revenue management
If you’re new to starting your own business, you may want to sit down with a professional to get all of your documents sorted out before you move forward.
Once you have a clear business plan, you can move on to the next phase, which is to get the home ready for guests. It’s important to keep in mind the comfort and convenience of your guests when preparing your home. If you’re working room by room to upgrade your home, focus on kitchens and bathrooms first. These are areas where guests expect cleanliness and functionality. Whether you’re going for a luxury vacation rental or something more fundamental, guests expect certain amenities in their home to ensure a comfortable stay. Make sure you equip your home in a way that allows guests to feel at home.
One of the hardest parts of marketing your vacation rental business is to find the sweet spot for your nightly rates. Too high and it’ll scare guests away, too low and you may attract the wrong crowd or lose money on your bookings. One mistake many business owners make is setting their rental rates based on their own economic situation or emotional ties to the home. Check with comparable properties in the are to find a competitive price that guests will pay and that will make you a profit
Once the home is ready, and prices are set, it’s time to start advertising. This can feel like a full-time job since there are so many different ways to get the word out about your vacation rental business. Social media is an excellent place to start; it’s free and only takes the sharing of your friends and family to reach a broad audience. Big vacation rental listing sites charge fees to list your home, but you’re bound to reach more people that way. Creating your own vacation rental business website is another way to advertise, and you don’t have to pay the commission as you do on more prominent listing sites.
When it’s time to write a compelling vacation home description, attention to detail is critical. A thoughtful description is crucial in getting potential guests to pick your home over the thousands of others they are seeing. Get creative, be honest, and really let the highlights of your home(s) shine. But don’t stop at the home description. Make sure to mention your commitment to excellence, your focus on the guest’s satisfaction, and your willingness to help.
If you have them, make sure you incorporate guest reviews into your listing too. People are big about reviews and want to hear what other people have to say, so posting reviews (even one or two of the bad ones) can help guests get an idea about the services you provide. Your response to negative reviews will showcase your work ethic and show guests how you handle issues.
And while a catchy description is good, you need to take outstanding photos. If you can get professional pictures of the property done, by all means, spend the money to do it. Guests will click through 2-3 images before deciding to move on to another house. Make sure the home is free of clutter and mess, focus on lighting, and use a tripod to prevent blurry pictures. If you’re doing the photos yourself, take your time and highlight your home’s best features. Post the pictures in chronological order as if the guest was moving through the house. Some people won’t even waste their time looking at a property if there are less than ten photos. The more the better, but when it comes to photos, it’s quality over quantity.
While a lot of the vacation rental industry is about connecting with people and creating lifelong memories for families, it’s also a business and needs to be run like one. This is why you need to create contracts, booking forms, and payment procedures so that the booking process runs smoothly. You want the reservation process to be seamless and safe so that guests feel confident from the get-go in how you run your business.
Once you get to this stage, you’re basically ready for business. Of course, there will be kinks you need to work out and systems you need to set up, but when you’ve got a solid business plan, a marketing strategy, set rates and all of the legalities in order, you’re very close to starting your vacation rental business. Some other issues you’ll need to address before you can get started are:
- Will you manage the home yourself or hire a property management team?
- Who will clean the home before/after each guest?
- Who will be responsible for repairs/maintenance on the home?
- What type of software/technology will you use to run your business?
- Who will take care of the accounting side of the business?
- How will guests get their keys? (Digital door lock, meet you for the key, etc.)
Anything worth having is worth working for. Not only can starting a vacation rental business be profitable and fun, but it’s also a great confidence booster. Starting a company on your own is a big deal, and is something to be proud of. Being your own boss comes with a lot of responsibilities, but a lot of rewards as well. The vacation rental industry is unlike any other aspect of the hospitality industry because it’s personal, it’s customizable, and it’s flexible. If you’ve been tossing around the idea of starting your own vacation rental business, it’s time to go for it. It’s fun, it’ll challenge you, and it’ll put some extra money in the bank. It’s a win-win-win!