There is much competition in the short-term rental investment field. So you need to be as strategic as possible to succeed.
Renting a second home is a fantastic way to diversify your portfolio, earn passive income, and increase your net worth. However, it takes much effort to manage a short-term rental!
Including vacation rental properties in your portfolio means more incoming money to your bank account and more work to do every day. Investing in vacation rental property has become a popular option for those who want to earn extra income.
However, there are measures and approaches you need to be familiar with to increase your financial return. Let’s explore how to market and promote your short term rental investments reasonably to optimize income.
What Is a Short-Term Rental Property?
When the lease duration of a certain property is less than 12 months, the rental is considered short-term. The property can be an apartment building, a condominium, a townhouse, or a house.
One who has no plan of residing in the property buys it with the purpose of renting it out. Short-term rental sites like Airbnb have flourished in high-traffic regions due to the ease of listing their rental properties. Short-term rental properties are also excellent for renters who want the lease term to be shorter than 12 months. What was once a side hustle for those looking to generate some additional cash has become a major source of income for people in many parts of the nation.
If managed effectively and through market knowledge, these properties can become significant assets.
A Guide to Maximizing Profits From Short-Term Rentals
You can only outperform a lousy investment if you try hard. So let’s get that out of the way before we go into the many strategies for increasing your monthly income.
Choosing ideal properties is the first step to developing a profitable short-term rental business.
- Compose a Description That Is Interesting and Informative
The property description must be informative and engaging to attract vacationers who are looking for a place to stay.
It can be tricky, so don’t automate or write a sloppy, incomplete description just for the sake of having a description for your listing. A good description of the property includes the home’s features, neighborhood, and location.
In today’s competitive real estate market, accurately highlight your homes’ facilities and amenities. Perfect wording and layout may help you attract potential visitors. If you are not confident with your writing, hiring a real estate expert may help you write an appealing, accurate property description.
- Short-Term Rentals Are Not Passive Income
Unlike popular belief, investing in vacation rental property is not a hands-off endeavor. Starting in this journey requires a significant time and commitment, especially during the first year.
After you have purchased and renovated the home and listed it for rent online, there’s still so much work to do. You need to advertise your property if you want people to book it.
Your responsibilities can include:
- Pricing your rental fee less than that of well-established rental businesses.
- Getting back or replying to potential visitors within 15 minutes of their inquiry.
- Encouraging recent visitors to your site to write a review.
After getting five-star reviews for a few weeks with your new rate, you can spend your time doing other things.
You might outsource the hosting chores to a third party by hiring a property manager. Your earnings will be affected if you do this since you have to split the property’s income. If you have more time, consider having additional investment alternatives that can boost your income even more.
- It’s Important to Invest in a Solid Location
Short term rental investing may only be a good option in some cities. Therefore, you must check the demand and utilize technology to choose the best short-term rental property location. New York City and San Francisco are famous vacation destinations, so there is a high demand for short term rental properties.
Budget-conscious travelers may choose short-term rentals near central locations. The significant number of rental homes in certain places can also affect your predicted revenue.
You should also research your area’s rules and regulations regarding Airbnb investment property. Some localities ban short term rentals, while others restrict them to only private properties. New York City and San Francisco are two examples of highly regulated metropolitan areas.
Short-term rentals may be legal in your city, but the homeowners’ association where you want to purchase a home may not allow them.
- Always Maintain Order
In the beginning, you will be responsible for managing your investment property. As a result, you will have to take care of things like visitor screening, routine maintenance, and booking confirmation. It may sound logical, but if you host guests several times a week, you may get overwhelmed by the daily tasks.
Make it a routine to maintain organized records before you reach this juncture in your business. Keep tabs on Airbnb-related costs, such as taxes, utility fees, and permits.
If you can afford hiring an assistant or property manager, assign them these tasks. Since you know the procedure, you’ll trust the progress and be able to see if there are irregularities.
Finding a seasoned veteran to serve as a guide is always an option. New investors with a mentor who can teach them about short-term rental investments will benefit them immensely.
- Include Pictures of Your Property to Attract Visitors
Using professional photos is a good way to sell your property to potential renters and guests. Web consumers have short attention span. Therefore, posting attractive professional photos of your vacation rental property is essential. A compelling but brief description with high-quality images listing can help potential clients have an idea how the place looks like. It gives a glimpse for tourists why they should stay in your vacation rental property.
Home marketing photos need more than a good camera. Professionals can shoot and create great photos under natural and dramatic lighting.
- More Reviews Can Be Found on Airbnb and VRBO
Avoid having poor VRBO and Airbnb reviews to attract high-quality guests, so you can charge premium prices year-round.
Your excellent service and convenient location should get many positive ratings. Most customers will need some prodding to write beautiful reviews.
The incentive should not be anything more than a simple reminder that good ratings are crucial to the success of your organization. Send them a reminder email or text message and ask them to give your property feedback a few days after their stay is over.
- Regularly Adjust Your Daily Rate to Maximize Efficiency
With traditional rental setup, you and your tenant agree on a fixed monthly amount and adhere to it for the lease term. However, if you have a short-term rental investment, you may adjust your rates as often as every day. A dynamic pricing method is used in this case.
Pricing depends on your account age, nearby comparable houses, and Airbnb guest demand.
Image source: Pixabay
Owners used to have fixed rates before the advent of dynamic pricing. But by doing so, you will be passing up the chance to increase your visitor count and your earnings.
The price may be adjusted based on supply and demand, which real-time monitoring market data can determine. Airbnb has a built-in tool that you can use to adjust your prices for different seasons, guest counts, and other criteria. Also, more resources that take a more individualized and data-driven approach are available.
To get a foothold in the market, it is a good idea to provide discounts to new customers. Once occupancy hits 90%, you may start raising prices until your profits level out.
- Tenant Management Can Be Simplified by Automation
The ancient adage, “time is money,” has never been more appropriate when renting a vacation home. Spending a lot of time on mundane administrative work and other chores that can be automated is a sure way to start losing money.
You can automate cleaning, inspecting, and reviewing to save long-term real estate costs. You may also create time for customer value development and market research.
A property management Yellowstone system or Airbnb/Booking.com multi-channel distribution are your options. These websites let you automate even the most tedious processes as you grow your business and expand your market.
- Maintain Consistent Listing Updates
You need to regularly update your property’s listing by adding fresh photos, new 5-star ratings, and new amenities.
To be competitive year-round and attract diverse guests, you must regularly update your public listings. The details depend on the local events and settings you highlight. Your vacation rental property website and social media sites can use the same strategy.
- Capitalize on Prime Tax Deductions
Many property owners are drawn to this opportunity because of the lucrative tax breaks that come with operating a holiday rental. Ensure you get the most out of your deductions before seeking additional methods to increase your income.
Short-term rental operators benefit most from tax-free earnings. If they use the home for more than 14 days or 10% of its rental days, all taxpayers get this huge tax advantage.
- Master the Art of Off-Season Promotion for Your Rental Property
Winter and fall are the best times to boost marketing to solve off-season issues. You may have extra time to review company promotion procedures and fill vacancies rapidly.
The second option is to provide a service or product that the competition does not offer. It could be cheaper pricing or added facilities and amenities. You should also emphasize the property’s location to set it apart from the competition.
Paying attention to what’s happening in your surrounding, no matter how little, is also good. Put a short description of the activities your guests can do into the listing’s description and take some photos of those activities.
And don’t be shy about recommending your venue to the event planners. In addition, you can place ads in their promotional materials and web pages.
- Offer Outstanding Customer Service
Short-term rentals must provide the best service since visitors want amenities at a price. Regardless of your weekly appointments, you must deliver excellent service.
Guest satisfaction is of the utmost importance if your business is in a highly competitive tourist area. A welcome letter with local insight is a terrific approach to ease their transition. You should also be fast to reply and be polite in all interactions.
It is crucial; therefore, you may hire assistance if you own many rental properties. Ensure the individual you recruit has excellent people skills and knows how to deal with challenging customers.
- Get in Touch With Your Past Customers
Maintaining a high occupancy rate is much easier when you have repeat visitors. Get in touch with past visitors and offer them “priority access” to be the first to reserve your home if there is a big event coming up.
Provide them a special rate or promotion during the off-season that is exclusively available to repeat visitors. You may also run a referral campaign in which they are rewarded for each booking made by a friend or colleague using a discount code they were given.
Conclusion
Short term rental investing one of the most profitable real estate investing strategies. It may turn your next investment property into a recession-proof, steady moneymaker.
It’s time to take the plunge and discover the wealth of fantastic real estate opportunities that lie beyond.
