Vacation rentals are great as a “second home,” but it can be quite rewarding if we look at it in terms of an investment property. Research has been done by different platforms stating that vacation rental owners can easily make profits of up to $30,000 in a year (now that’s a great number!).
However, making the most of it and getting more profit from it can be quite time-consuming. You need the proper knowledge and tricks to make sure you’re getting more than what you invested. To know this, you either need to be exceptionally good in the field or learn from your mistakes. Either way, it’s still going to take a lot of time.
In this fast-paced world, people are constantly looking for ways to earn passive income. While there are many investment options, short-term rental investments are actually a great way to multiply your income. But, learning the right ways can take some effort.
This guide is sure to help you, even if you are a beginner or a seasonal professional in the industry. We’ve listed down all the realistic steps on how to make money with a vacation rental property as a host or property manager to make maximum profit.
How are Vacation Rental Properties Profitable?
Before we move on to the next steps, we should first understand whether these properties are profitable. And if they are, how? If you ask me, I can vouch for vacation rental properties as a great investment option. You don’t just get easy passive income once established, but you get many benefits as well over time.
The main motive of vacation rental properties is to provide people (mostly tourists and travelers) with a well-equipped place for the short term, which is why these are also called short-term rentals. But this doesn’t just stop here; you’ll make more profit if your vacation rental property has a good location where travelers visit the most. There are other factors as well, such as occupancy rate, seasonality, and competition.
Comment
byu/jabbanobada from discussion
inrealestateinvesting
Since these properties are given out for a short time and people keep coming, they profit more compared to long-term rentals, where the cost is less due to people staying for a longer time. So, yes, I think these reasons pretty much sum up why I believe short-term rentals are a great investment.
Steps to Making Money with a Vacation Rental Property
If you’ve made up your mind about investing and making money through this means, we’re here to help you! For your vacation rental success, here are some steps I’ve listed based on my years of experience in the real estate as well as the hospitality industry.
Step 1: Buy the Right Vacation Home
The first way to start making money in the vacation rental business is by first buying the right property. The kind of property you buy can really make or break your entire profit. You’ll either benefit a lot or nothing at all. For deciding the best vacation rental property, make sure to think about these factors:
Location
As I already mentioned, location plays a very important role in skyrocketing the profits of your vacation rental home. Choose a location for your property, as you would like to spend a nice vacation in a rental property. Look for the things around it so it is convenient for your guests. Also, make sure the airport and stations are nearby so your guests can reach your rental property easily.
Property Size
Think about how many guests can stay at your property. Don’t go for a property that is too small or even too large. Stick to your budget and see what are the options to make your guests stay comfortable.
Seasonality
Vrbo’s research suggests that the peak season for a vacation property can only be there for approximately 80 days. So, you would want to get a property that welcomes guests throughout the year to keep your cash flow going.
Occupancy Rate
Get a sense of the occupancy rate of the area in which you are planning to get the property. You can do this by quickly checking the booking platform calendars to check for availability or reaching out to a local real estate agent or a vacation rental property management company.
Local Tax Rules & Regulations
Be sure to check out local regulations and HOA rules, as these can highly impact your property’s income potential. Some cities and states have strict rules on short-term rentals, and others might ban them altogether. Also, don’t forget to see if there are any extra requirements like permits.
Condition
Evaluate the property before buying it and see if it’s in good condition. If you are okay with remodeling, you can pretty much get a property for a lower price. But, if you don’t want the hassle of running around the contractors, look for a property in good condition.
Would you Stay on Your own Property?
If you have a positive answer to this, you’re probably on the right track, and guests will love the place. However, if the answer is negative, I would suggest you go back and make changes to make your property livable for your guest.
Step 2: Focus on Furnishings
The interior and furnishings inside the home also matter a great deal. Even if your property looks good, it’s the interior that adds character to the entire space. Apart from making it look beautiful, you should also think about enhancing your guest experience. Try focusing on these areas of your property:
Living Area
Add nice welcoming decor because this is the first place your guests will see. You can incorporate local charms to make sure your guests relate to the culture of the city. Also, add colors that go with the entire theme. I like shades of white as these are the safest options and go well with furniture and decor items.
Bedroom
Ensure the bedding is clean and the room looks neat and tidy. I would suggest you go all white for a rich look. Also, check the pillows and mattresses to see if they are comfortable. You can include some decor items to add something extra to the room.
Kitchen
Keep everything ready and stocked up in the kitchen so your guests can use them. Check the appliances to see if they are in working condition. Provide cooking utensils and supplies, and don’t forget to clean the kitchen area and make it ready for the next guests.
Furniture & Furnishings
After you’ve created a base for your vacation rental property, it’s time to add some magic to the dull place. Invest in good quality furniture that really pops out the best of your space. Don’t go for cheap ones; your guests will eventually know, and also, you’ll have to keep changing them regularly. Put up beautiful and matching drapes and curtains. Doing this will make your short-term rental even more appealing.
Step 3: Stock Up with All Useful Amenities
When I go somewhere, I personally love a place that provides me with the maximum amenities. Guests usually love a stocked-up place so they don’t have to carry everything everywhere. When you provide them with everything, it adds up to your guest’s comfort. Make sure you have these things ready:
Basic Items
It’s best to nail the basics first, then think about what extras you want to add. For your basic amenities, the main goal is to make sure your guests feel just as comfortable as they do at home. To avoid missing anything important, it’s a good idea to follow a solid hosting checklist when stocking your vacation home.
Extras
It’s always a smart move to go above and beyond the basics. Adding a few luxury touches can really elevate your rental. Things like hot tubs and free Wi-Fi are popular extras that guests love.
Step 4: Get a Landlord Insurance
Just as you like to protect your life, home, or even car, protecting your second home (vacation rental property) is also required. Getting landlord insurance will keep your property protected from any future damage or unforeseen losses.
From replacing the property due to natural disasters to providing liability coverage if a guest sues you for any damages, landlord insurance covers many situations. And, once you have it, trust me, you’ll have peace of mind knowing your investment is well-protected.
Step 5: List Your Vacation Home
Whenever you list your vacation homes on OTA, make sure whatever you’re trying to show your potential guests looks real. There’s no point in showing something unreal that will later be a disappointment for your guests. While listing your vacation homes, take care of these pointers:
Good Pictures
People trust those vacation rentals that show what they look like. Therefore, it’s very important to click good pictures. Having clear and good pictures put up will attract more bookings and allow you to make more money.
If I can suggest, I would love to include a 360° view of the entire place or even a video. This will make the guests more familiar with the space even before they visit it.
Give a Short and Simple Description
A description of your vacation rental helps highlight the amenities and features you are providing. Yes, while you may be adding pictures, it still might be tough to capture all of it in photos. Just make sure that when you’re writing about it, use the right keywords—it’ll help with search engine visibility too.
Add an Attractive Title
If your description is simple, try thinking of a catchy title to grab the guest’s attention. You’ll have a lot of competitors for vacation rentals, which is why you need to stand out from the crowd. Try using catchy phrases and words. Don’t go behind generic terms, and don’t write something that you cannot live up to.
List on Multiple OTAs
Direct bookings or just listing your property on one OTA website is not enough if you are serious about this business. I highly suggest you list your properties on different OTAs, such as Airbnb, Vrbo, Booking.com, etc, to get the most reach. The more OTAs you’re on, the more chances you’ll have of bookings. This will also help you list yourself on Google Vacation Rental, which will give you a global reach.
Step 6: Decide the Pricing
You really can’t rely on the old pricing model where you just a nightly for every season and just forget it like that. Now, people are traveling more, and the vacation rental market is becoming even more competitive. This is the reason why even the pricing is dynamic and keeps on changing based on the season, demand of the area, and number of guests. You can, thus, opt for these kinds of pricing options:
Data-driven: In this pricing option, the algorithm uses multiple market data points to set optimized prices.
Dynamic Pricing: The pricing keeps on changing based on the season, availability, and demand, basically based on the market activity, to ensure prices are not too overpriced or underpriced.
Local expertise: Work with local property managers who know about the area and will help you adjust the costs in real time.
Step 7: Control the Calender
Your calendar plays a big role in your vacation home’s profitability. It is best to set up a schedule for when your vacation home is available to rent for potential guests. Remember to keep it up-to-date to ensure the booking process goes smoothly for future guests. There are a few tips I would like to suggest for the profitability of your rentals:
- Don’t set a fixed minimum stay that is long. This will turn back the potential customers who are looking for a shorter stay. For example, if someone wants to stay just for 2 days and you have set a minimum booking day of 5 days, chances are that your vacation rental property won’t even show up. This might be a huge loss for you.
- On the other hand, don’t set a minimum rate for your vacation properties. Setting a minimum price could look good for you to earn a good amount in a day, but this strategy can actually backfire on you. Like, $300 might look fine during the peak season but might look too expensive for the off-season.
Step 8: Properly Market Your Vacation Rentals
In vacation rental businesses, you can’t make money until you market your property. A good marketing plan is necessary for showing your property out there, attracting more bookings, and creating good vacation rental revenue.
Comment
byu/gabfelicianowrites from discussion
inSocialMediaMarketing
Through a good marketing strategy, you can expect your rentals to be above your competitors in the vacation rental industry. Here are some areas you can look at:
- SEO (Search Engine Optimization): Here, you need to focus on using the right keywords and signals to make sure your home reaches the right audience and ranks well on search engines.
- Display Ads: These are the banner ads you usually see online.
- PPC (pay-per-click) Ads: These are sponsored ads that show up at the top of search results when potential guests and travelers search for specific keywords related to your property.
- Facebook Ads: Add a good picture of your vacation rental home, and when someone searches for a vacation rental in your area, Facebook Ads will pop the images in their feed.
- Social Media: Use social media platforms to promote your vacation rentals, reaching hundreds of thousands of potential guests.
Step 9: Offer Good Deals
As new property owners, offering good deals and promotions to your potential guests is a good way to attract them and get more bookings. Guests are always on the lookout for something extra, and if you are able to give them what they want, you just can’t imagine how long you can go in the industry.
Conduct in-depth market research on what customers are looking for. It can either be a discount on their first bookings or a night free. Promotions not only help draw attention to your services but also create buzz, encouraging word-of-mouth referrals.
Once you’ve attracted a good number of customers, ask them for reviews. If you are able to create a strong online reputation in the initial days of your business, it will be one of the most effective ways to accelerate growth and solidify your presence in the market.
Step 10: Keep Working to Get Positive Reviews
Getting good reviews can truly skyrocket the success of your vacation property. The simple reason behind this is that guests trust the opinions of others.
To make sure you get 5-star reviews from all your guests, be transparent by describing your vacation rental accurately, clean it before every stay, and go the extra mile by offering additional amenities to enhance their experience. And don’t forget to remind guests to leave a review!
Step 11: Acknowledge Negative Reviews
Don’t take negative comments as a bad thing. If you look deeply, these can actually be a blessing for your vacation rental business. I am saying this because you get a chance to improve and build trust.
Therefore, whatever feedback you get, take it seriously and make small changes, especially if certain issues pop up more than once. When you fix the mentioned problems, it shows you care about your guests’ experience, and you might even win them back in the process.
Step 12: Hire a Property Management Company
Making money from your vacation rental becomes so much easier when you’ve got a full-service management company on your side. They take care of all the little details, from guest communication to cleaning and maintenance, so you don’t have to stress over the day-to-day stuff.
With a good management team handling everything, you can sit back, relax, and enjoy the extra income without worrying about all the time and effort that goes into running a rental property. It’s a hassle-free way to maximize your earnings while freeing up your time to focus on other things.
Why Trust Midway Vacations with Your Vacation Rentals?
Midway Vacations is a top vacation rental management company and one-stop shop for all your property management needs. We help you increase your vacation rental income to a great extent. We give you full service for all your property needs. We also have experienced property managers who will take care of all your required details are taken care of so you don’t have to worry much about the progress of your property and the income you’re making.
Some of our services include:
- Great Housekeeping
- Top Guest Service
- Listing on Top Booking Platforms
- Effective Marketing Strategies
- In House Maintenance
- Detailed accounting and Reporting
- Revenue Optimizations
- Use of Advanced Technology
If you are planning to buy and invest in any of the vacation rental properties in Hawaii, we’ll help you out throughout. The above-listed services are just a gist of what we offer. We provide many more services to help you grow in the vacation rental market and make more money out of it.
FAQs
What are the best locations for vacation rentals?
Ideal locations typically include tourist hotspots, nearby attractions, beach areas, or city centers with significant events or attractions. Proximity to amenities, public transport, and scenic views also enhance a property’s appeal.
How should I price my vacation rental?
Pricing should reflect local market rates, seasonality, and property features. You can use dynamic pricing tools or software to adjust rates based on demand, special events, or holidays. Also think of offering discounts for longer stays to attract more bookings.
How can I determine the potential profitability of my vacation rental?
To know the profitability of your vacation rental, consider factors like location demand, average rental rates in your area, occupancy rates, unforeseen expenses, and operating expenses (mortgage, maintenance, utilities, and cleaning fees). Make sure to research local market trends and competition to gauge potential earnings.
Conclusion
A vacation rental is a great investment property if you are looking at it as a business model. This is a lucrative opportunity for generating passive income, provided that owners approach the investment with careful planning and knowledge. By following the outlined steps, from selecting the right property to optimizing pricing and managing guest experiences, you, as an aspiring host, can maximize your returns. Ultimately, with the right dedication, vacation rentals can become a rewarding venture, enriching both the owner’s finances and guests’ experiences alike. Need more help? Contact us to get the best from your rental properties!
