When you buy an investment property with the intention of using it as a vacation rental, there’s a lot to consider. Should you manage it solo or hire a property management company? What should you charge? What’s tax deductible? etc… But before you drill down into the details, one of the most important questions you should ask is how to start a vacation rental business that actually makes money. Managing a single vacation rental or portfolio can be a great source of passive income—if done correctly. So make sure you get it right. Here are some key tips for starting a profitable vacation rental business.
Research Your Rates
Price is one of the biggest factors for guests, and it can be one of the most puzzling factors for vacation rental owners. If your rates are too high, you may deter renters. If they’re too low, you could be leaving money on the table—and you could risk attracting guests that don’t appreciate what your home has to offer. Finding the sweet spot can be tough. But do your research in this area, and you’re likely to see some major payoffs.
Start by checking out the competition. Make a list of your property’s amenities, and find similar properties to compare it to. Pay attention to high and low seasons, and adjust your rates accordingly. For instance, if your rental is in an area that gets busy for certain seasons (like Spring Break or Christmas), set your rates high (but not so high you price yourself out of the market). Don’t discount. People expect to pay higher prices during these times, and offering discounts could cause you to lose money during a period where you’re very likely to make more!
A common error that new vacation rental owners make when pricing their properties is to base their rates off of their personal budget or on some emotional tie that they may have to the property. Don’t fall into this trap. Stick to the data, and you should have better results. It may sound complicated, but it doesn’t have to be. There are great vacation rental pricing tools available to help you optimize your rates!
Engage Your Guests, But Don’t Get Bogged Down
Finding ways to connect with your guests throughout the rental process is essential to providing an unforgettable experience. Anticipate the needs of your guests, and meet said needs before they even have to ask. This is crucial while your guests are staying with you, but it’s also important to keep communication open even before they book. Answering questions promptly can make the difference between a booking and a lost customer.
When starting a vacation rental business, many owners may not consider the amount of time needed to communicate with their guests. Guests can and will call, email and text you—at all hours, day and night. Do your best to be easily accessible, but set some boundaries—we do have to sleep you know). And be sure to take advantage of key communication tools that can help to make the process easier for you and free up your time. Things like sample contracts and email templates can save you some serious time, while email auto-responders and e-signing can make the booking process seamless for you and your guests. The earlier you incorporate these tools into your processes, the easier your life will be.
Master The Marketing
An intentional, comprehensive marketing strategy can do wonders to get the bookings rolling in. Successful property owners do more than just upload a few pictures to Airbnb and hope for the best:
- Multi-Channel Listings – You may have a preferred reservation channel, but if you’re not listing your properties across all of the major platforms like Expedia, Booking.com, Airbnb, etc.—you could be forfeiting bookings. Don’t get overwhelmed by the need to update your listings in each channel, either. There are channel management tools available that can sync all of your listings and allow for easy updates across all of your channels at once!
- Photography – When guests search through listings online, it’s the photos that engage them first. Make sure to invest in high quality property photography to help your rental stand out. Guests should be excited to book your property from the pictures alone. Hello dream kitchen!
- Engaging Descriptions – So, you’ve hooked a potential guest with a great shot of your home. Now, make sure you highlight all of your great amenities in your description. Keep language brief, informative and engaging, and you’re sure to get the bookings.
- Responsiveness – Failing to answer a question about a property before your competition does could cause you to forfeit potential business. Make sure you’re on top of communication, or hire a reservations coordinator to take care of it for you. #igot99problemsandmissedreservationaintone
- Reviews – Many guests look to reviews when deciding what properties to book. Be sure to create a positive guest experience—and be proactive about requesting reviews. There are review tools available to help you get those little yellow stars with ease.
Make Your Property Stand Out
Travelers are choosing vacation rentals over traditional hotels, because they want a unique experience. Guests want space, privacy and comforting amenities that make them feel like they’re at home. Make sure they have everything they need for a vacation that they’ll never forget and rave about. To help you, we’ve compiled a comprehensive vacation rental inventory checklist. If you’re just learning how to start a vacation rental business, that’s a great place to begin!
In addition to offering the essential amenities, here are some things you can do to make your property stand out:
- Allow Pets – By welcoming furry friends, you become a top contender for guests who travel with their pets. And yes, it’s okay to charge a cleaning fee to cover any potential damage. Pet owners expect this. Their precious four-legged babies are worth it!
- Concierge Services – Offering concierge services shows that you’re more than just a rental. You’re a business that cares about its guests. Get it right, and your guests will show their appreciation. Consider offering local tours + info, grocery shopping, transportation and other services that can take the guest experience to the next level.
- Create Loyal Customers – Consider offering repeat guests a discount or a welcome gift to thank them for their continued business. You can offer rewards or discounts for referrals too. This could make a big difference when you’re just starting a vacation rental business, as you’ll want all of the bookings you can get.
- Other Extras – For more plus ones, consider providing an outdoor grill, Netflix, bikes, baby equipment, pool toys, video games and anything else that can make life easier and more enjoyable for your guests during their stay.
Bookfull Can Help You Start A Vacation Rental Business The Right Way
When starting a vacation rental business, you can get bogged down quickly with everything there is to do. If you’re new to the business, you’ll find that tasks can pile up in no time. If you are looking for resources about how to start an LLC, check out this site with hundreds of guides for getting started. It’s broken up by state as well for easy search for exactly what you need.
But don’t stress over everything. Bookfull offers FREE vacation rental property management software with a full suite of features that can help you streamline your processes, save time and make more money. From updating listings and creating reports to communicating with guests, ramping up your marketing and simplifying your accounting, Bookfull is your key to less stress and more bookings.
Try Bookfull for free today!