It's undeniably been a rocky two years for the short-term rental industry, but even between increasing national restrictions and mounting uncertainty, vacation rentals have found a way to thrive and to continue to make money.
Now, this certainly hasn't been the case for all short-term rentals — the property owners that have put in the work by investing in the right properties to begin with, pricing their rental rates right, and marketing their vacation rental appropriately are the ones who have seen the best results.
Making sure you're doing everything you can to make your short-term rental investment a success (whether before, during, or after a pandemic) is always going to be important. This is particularly important when it comes to maximizing your rental income and continuing to expand your portfolio.
So, what should a prospective investor keep in mind to ensure a sustainable income and a thriving vacation rental business? What financial challenges and uncertainties lay ahead?
In this article, we'll walk you through the ten most important tips you need to maximize your short-term rental revenue, cut costs, and continue crushing the fierce competition this industry is so well-known for.
There's never been a better time to start investing in a short-term rental property, and we want to show you how to make it in the industry without losing money and precious time!
Ten Ways to Maximize Your Vacation Rental Income
Before we start exploring all the ways you can start maximizing your monthly revenue, let us make one thing clear first: No matter how hard you might try, you simply cannot out-perform a bad investment.
The latest industry insights show that traveler's needs and expectations have changed considerably over the past year. Notably, more and more guests want to stay in quiet, more off-the-beaten-path locations as opposed to bustling urban centers and international tourist hotspots.
Savvy investors should make sure to research up-and-coming locations and timeless, beauty-spot destinations if they're looking to generate consistent revenue throughout the peak and off-peak season. Talking to local realtors is paramount during the research phase of a property hunt. You should also make sure to research profitable properties by checking the latest analytics (Airdna is your friend)!
Once you've done all the necessary research and settled on a property that ticks all the boxes, you'll have to maintain profitability by implementing marketing tools and pricing strategies that help you maximize your revenue.
So, without further ado, here are ten ways to start making more money out of your vacation rental:
Create an appealing and accurate description
Your property description is like a business card for your vacation rental: It should tell your prospective guests everything they need to know while piquing their interest at the same time.
This is clearly not an easy feat, and as such, you should make sure not to automate the process or write down a poorly written, half-baked description just to fill the page! The best descriptions convey what the experience of staying at the property is going to feel like, as well as explaining all the home features, surrounding amenities, transportation tips, and other important details guests should know before locking in their booking.
Appeal and accuracy are key, and the more you go in-depth into all the best features of your property, the more you'll be able to stand out from the crowd and set your properties apart from the rest — this is an increasingly competitive market after all, and uniqueness speaks louder than anything else.
An eye-catching headline will go a long way in selling your property to potential guests, and spot-on grammar and clear formatting will help you retain their attention and get your message across at a glance. If you really don't know how to craft a property description that is engaging, appealing, and 100% accurate (all at the same time), it might be worth reaching out to a copywriter or experienced real estate professional to really get ahead of the curve!
Use photography that sells
By the same token, appealing and accurate photos are the best business card you could ever get if you're looking to market your property online.
The web is well-known for short attention spans, and there's no better way to capture and hold that attention than to take beautiful, professional photos of your vacation rental. Similarly, crafting a compelling listing description, to go with exceptional photography to market your property can help you convey the experience of staying there. This will show guests exactly why they should choose your vacation rental for their next holiday.
In order to produce photos that can effectively sell your property this way, you'll need much more than just a decent-quality camera. This is a job that is usually best left to the professionals, as they'll know how to use both natural light and stage light to take clear, appealing photos as well as how to stage the home to convey the "feel" you want to get across.
It's these nuances that can take your vacation rental from great to exceptional (boosting your monthly occupancy rate and revenue in return!), so budgeting for one big professional photoshoot is heavily recommended. Still, if you wish to take care of all the photography yourself, you can definitely get good results by adopting a professional photographer's mindset: Play around with lights, clear out the clutter, opt for hotel-like staging, and don't forget to take separate pictures and use different decor for the winter and summer seasons!
Get more reviews on Airbnb and VRBO
In the age of Yelp and Google My Business, avoiding bad reviews on listing platforms like VRBO and Airbnb has become crucial if you wish to continue attracting quality guests and charge premium prices throughout the year.
While it might be easy to think that great service and a great location will automatically get you plenty of positive reviews, the truth is that most guests will need a little incentive to leave the exceptional reviews you're after. The incentive can be something as little as reminding your guests of how important positive reviews are for a business like yours. Perhaps give them a friendly reminder right before the end of their stay. Little touches aside, however, you have to be prepared to put in the work before expecting something exceptional!
We recommend going above and beyond in terms of online and on-site communication, adding on helpful local tips to the arrival brochure, checking in with your guests every couple of days to see if there's anything they need, and generally being a pro at exceptional customer service — it's hard work, but we can guarantee it will pay off in the long run.
Automate your rental tasks
It's an old saying, but it'll never ring truer than when you're dealing with a vacation rental: Time is money! There's no faster way to start losing revenue than spending hours on lengthy admin tasks and other miscellaneous jobs that could easily be automated.
So, if you wish to not only cut down long-term property management costs but also get more breathing space for creative marketing and market research, it'd be wise to start using different automation software to take care of cleaning, checkouts, reviews, and more.
You can choose to take the multi-channel distribution route, either through sites like Airbnb and Booking.com or through property management systems. These programs can easily make the most boring tasks run on their own while you focus on scaling your business and implementing better marketing.
Investing in a property management system (PMS) is going to take a considerable chunk of your revenue. But if you want to continue growing and investing in more properties, it is a necessary step you'll need to take!
Be your own property manager
Choosing whether to be your own property manager or hiring a third-party professional property manager instead is arguably going to be one of the most important decisions you'll make in your vacation rental journey.
There are clear benefits to both. Hiring a manager will allow you to have more time for yourself and generate a true passive income, while going at it on your own will save you plenty of money and help you learn the ropes.
As property management systems can take care of many of the hassles associated with running short-term rentals, it might be better for first-time investors to avoid expensive managers and take care of check-ins, maintenance, cleaning, and everything else themselves!
Price your listing right (and adjust it often)
Pricing is at the heart of what makes a vacation rental fail or succeed, so if you want to make sure you're maximizing your rental income, you'll have to set the right price for your property and learn how to adjust it throughout the seasons.
You should always make sure your nightly rate is seasonally adjusted with every off-season and peak-season that approaches. Generally you should raise the price over the summer and various holidays while offering discounts for longer stays during fall and winter.
You should also keep an eye on local events and other smaller local attractions that might call for higher demand and higher rates. You should also make sure to plan your pricing well in advance (up to one year in advance, actually) so that you never miss an opportunity!
Regularly update your listings
Following on from our last point, you should also make sure you are updating your property's listing quite often, adding new images, new stellar reviews, and new features to your description.
Updating your most prominent listings on a regular basis will ensure your offer is fresh through different seasons and is always attracting different guests. This will depend on the staging you're choosing to highlight and the range of local activities and events available in your location. You can easily use the same strategy across all other digital channels, such as your official website and any social media platforms you might be using to promote your vacation rental.
Leverage key tax deductions
The generous tax benefits associated with vacation rentals are what prompts many real estate investors to take on the challenge in the first instance. Why not make sure you're actually taking advantage of your deductions before you look at other ways to make more money?
The biggest tax benefit you can claim as a vacation rental owner is 100% tax-free income if you rent out all or part of your home for no more than 14 days per year. This generous tax break applies to all income ranges, and it can also be claimed if you use the home personally for more than 14 days or more than 10% of the total days it is rented out!
Encourage long-term stays
As more travelers are opting to spend their holiday time in long-term accommodation your off-season is likely to experience lower occupancy rates than usual. Therefore, it's definitely a good idea to encourage guests to stay longer in return for a convenient discount.
Long stays are not only beneficial when it comes to lowering vacancy periods over the winter and fall but they're also incredibly cost-effective when you're looking to reduce maintenance and cleaning bills!
Know how to market your property during the off-season
Speaking of off-season troubles, the winter and fall months are exactly when your marketing strategy needs to be turned up to one thousand. You'll likely have more time on your hands to revise your promotions and ensure vacancy periods are kept to a minimum.
On top of offering discounts and encouraging longer stays, savvy owners might want to invest a little more in advertisements (either on Google or social media, or better yet, a combination of the two), update their listings, post more Instagram pictures, and even update their website with more travel content. You'll want to show-off just how appealing your home can be for a long staycation or work-from-home getaway. If you're dealing with a beach home — keep in mind that the off-season will likely attract a different demographic of guests, so make sure to research your target market beforehand!
Boost Your Short-Term Rental Income
Owning and operating a vacation rental is one of the most profitable ways of making money in the real estate investing world, and by choosing the right price model and the right marketing strategy, you're likely going to be able to turn your next investment property into a recession-proof, predictable money-making machine.
If you’re ready to take the leap and see just how many incredible properties are waiting for you on the other side, The Short Term Shop is your one-stop destination for everything short-term rentals and real estate investing. Get in touch today to discover how you can turn your next real estate investment into a profitable full-time business!