There are many reasons why people buy a vacation home. For some, it's a luxurious option for escaping the daily grind. For others, it's an investment to make extra money renting out their property. Short-term rental property management should be your next step if you are the latter.
When investing in real estate, you want to make sure your property is managed efficiently, whether it's a short-term or long-term rental. But managing a short-term rental property can take time and effort. You know that time is money. And when it comes to managing your short-term rental properties, the more time you have for other things, the better. Of course, you can always manage your property. But how efficiently can you do so, and for how long?
This is why property management for short-term rentals is in high demand and will continue to grow as more people invest in this type of real estate. Read on to discover how you can make it work for you.
What is a Short-Term Rental Property?
A short-term rental is typically a home, apartment, or other type of accommodation leased to visitors for no longer than 30 nights in a row. Additionally, it refers to a room within an apartment that is held for less than a year. Many define short-term rentals as lasting between a couple of days to some months. Nevertheless, any lease of fewer than 12 months is considered short-term in the housing industry.
Most individuals who use short-term rentals are either on holiday or work trips. Therefore, lengths of stay range from a couple of days to many weeks. The maximum period may change based on the region and municipality where the rental is situated.
Single-family homes, multi-family complexes, or even specific rooms within one of these can all be considered short-term rentals. If no expiration date is indicated, month-to-month rentals are typically not regarded as short-term leases.
What is Short-Term Rental Property Management?
Short-term rental property management involves controlling and maintaining properties used for short-term rentals. The manager of the rental properties in question or the organization in charge of administering them is tasked with many day-to-day management responsibilities. Some of these responsibilities include:
- Guest evaluations monitoring
- Guest interaction
- Organizing rental ads and reservations
- Taking care of check-ins and checkouts
- Upkeep and repairs
In other words, the primary objective of short-term rental property management is to maximize efficiency and ensure that everything goes smoothly. Ultimately, using an excellent rental property management company will boost customer service and increase the returns on your investment.
Benefits of Investing in Short-Term Rental Management
People always need a place to stay when they travel. And that's just one of the things that makes the short-term rental business a special and excellent investment. Here, you’ll find a few more reasons why so many people are choosing to invest in short term rentals.
Gain More Income
In the United States, a residence on Airbnb costs an average of $216 per night in 2021. This equates to $1,512 per week or $6,480 per month.
If individuals are prepared to shell out more than that for a vacation rental, they will likely demand better value. It must be fitted-out and well-maintained to provide a higher degree of service.
These costs make it possible and necessary for investors and vacation rental owners to charge more, positively impacting their profit margin.
You can receive the same significant tax advantages from a vacation rental as you would from owning a long-term rental property.
Many unintentionally enter the short-term rentals management industry when renting a second home. But it makes no sense to leave the property empty for the remainder of the year. It is more financially advantageous to lease it out temporarily. This will enable you to use the property and turn it into an income-generating property rather than becoming a financial burden.
Discover The Best Short-Term Rental Property Near You
Short-term vacation rentals are a great option if you're looking for an investment opportunity to help you generate passive income. They're affordable and easy to manage and provide a steady income stream.
Finding a short-term rental property can be a daunting task. Hundreds of thousands of properties are available across the country, and it can take time to know which is best for you. The Short Term Shop can help you narrow down your search by making it easy to locate some of the best short-term rental properties in significant areas and lucrative markets.
Getting Started on Short-Term Rental Property Management
Owning a vacation rental property is a lucrative investment. But first, there are some things you need to know about getting started with short-term rentals management.
#1 Do It Yourself
One choice is to do it yourself if you would rather have real influence over your assets. You'll avoid having to pay expensive property management costs by doing this. However, it can take a lot of time because you'll need to balance many tasks. If you decide to use the DIY method, make sure to follow these steps:
— Set Business Objectives
What goals do you have for your company? How many homes are you hoping to own? You can rest easy knowing that the crucial details have been handled by identifying strategic goals and spending the time to prepare a marketing strategy.
— Obtain the Necessary Business License
Additionally, you should get a business license following the laws governing vacation rentals in the area where you intend to operate. Depending on where you live, you may need both a short-term rental license and a standard business license. You can get further advice and resources with the application from a real estate attorney.
— Prepare Your Rental and Attract Visitors
You'll also need to get your house ready and invite your first visitors. Your vacation rental will need all the necessities, but you'll also need to provide amenities to make guests happy.
You must advertise and promote your listing to attract your first visitors. To expand your awareness beyond the users of vacation rental websites, developing a business plan is a good idea. Your plan should factor in your target audience. Do you want to attract families, individual vacationers, or couples? Your rental's design and amenities have to appeal to your target audience, even if it's a combination of more than one demographic.
Top Platforms for Promoting and Managing Short-Term Rentals
You will need assistance with short-term rental management to operate and advertise your vacation rental business. The best property management software for your property are listed below.
The industry standard for short-term rentals is Airbnb. It was first created to make it simple for homeowners to rent out individual rooms, but it has now grown into a full-fledged private platform for short-term rentals.
You should consider the expenses associated with Airbnb property management companies, such as cleaning, higher electricity bills, taxes, and Airbnb's host charge, which is 3% for processing transactions. Booking fees from Airbnb range from 6% to 12%.
Unlike Airbnb, you can't use VRBO to rent a room in your own house because owners on the site can only lease out entire houses. Your schedule and reservations will be taken care of by VRBO. VRBO assesses a fee starting at 8% per booking.
As opposed to the first two on the list, Vacasa offers a broader range of services. Vacasa offers various services, including 24/7 customer service, tax and permit assistance, and guest verification. They are North America's largest property management company, with more than 25,000 short-term rentals.
— Booking.com and TripAdvisor
Booking.com and TripAdvisor provide an all-in-one travel website service, allowing customers to book hotels, flight tickets, rental cars, tourist hotspots, dining, and other services on one website. It is the best location to advertise a vacation rental company as a component of a complete service experience.
#2 Hire a Vacation Rental Property Manager
You should search for various factors if you need to hire a short-term rental property management company. We have included some of our best tips for hiring vacation rental property managers below.
Tips for Hiring a Property Management Company
— Study the Property Management Charges & Terms
There are numerous additional fees to think about and comprehend when renting out a holiday home.
Management fees for vacation rental properties usually range from 10% to 50% of the rental revenue from reservations.
The industry average for managing Airbnb vacation rental properties ranges from 20% to 50%.
Many management organizations employ a standard commission structural model to delineate the fees, which is often categorized into three types:
- Fixed-rate model
- Guaranteed-rate model
- Commission fee model.
An excellent vacation rental management company will request a signed agreement with you, the property owner. It's a bad sign if the property management firm does not require one.
— Property Management Services
When selecting a company to work with, it is crucial to understand the precise services the potential candidate offers. Ask about cleaning, marketing costs, expert imagery, maintenance, and listing updates.
— Early Reservations
If the business you are hiring is only open during the workweek, you'll lose out on many potential customers. According to experts, most online reservations are made before, after, and on weekends.
— Online booking and Digital Marketing Expertise
One of the most crucial considerations when selecting a management business is whether or not they have vacation rental managers who understand how to engage your desired demographic and improve your listings.
Search for their properties on VRBO and Airbnb to see if they have experience in this field. It's not a good sign if you can't find them on the first page.
6 Tips for Successful Vacation Rentals Management
With the rise of Airbnb, more and more people are looking to invest in vacation rental properties. But what does this mean for you? If you're an investor or homeowner, there are some guidelines you need to follow to be successful at property management for short-term rental properties.
#1 High occupancy, Excellent Service, and Stellar Reviews
The first principle of a sustainable vacation rental is that it depends entirely on customer feedback. Your occupancy rates will rise due to negative reviews, and the price you can charge will decrease.
Your guests have a pleasant experience if you provide them with simple touches like suggestions for local activities, concerts, or the finest eateries. Another standard inclusion among guests is a small welcoming gift.
#2 Utilize Energy Wisely
Even if no one resides there, you, the owner, are still obligated to pay the electric bills for a vacation rental property. You can reduce your energy expenses if you invest in energy-efficient alternatives for the building, which will also benefit your cash flow. This can entail adding smart meters to control the energy consumption and temperature used by the residents more effectively.
#3 Understand Tax Laws
There are specific advantageous tax provisions for rental property investors.
#4 Furnish Your Vacation Rentals
It is necessary to furnish short-term rentals. You may occasionally prepare your properties for year-round rentals, but you'll generally rent them without furniture. Nevertheless, top short-term businesses know the burgeoning need for tastefully-equipped short-term rentals.
Below are some reasons why your short-term rental property should be furnished:
— Greater Rent
Renters who only need a furnished apartment temporarily will pay more. Additionally, the greater rent covers maintaining and furnishing the premises.
— Lower Turnover Rates
Since so many residents only stay for a couple of months, short-term rentals have better turnover rates. But if you rent furnished apartments, you won't have to worry about guests damaging your property as they move stuff in and out. Cleaning and preparing the apartment for the subsequent occupant is simple.
— Draw in the Appropriate Demographics
The majority of those seeking a short-term lease may need more furniture. Therefore, by providing luxurious units, you'll attract the ideal clients. Many potential tenants will only consider your rental if you decide to furnish it.
One thing you must take into account is your tenants' wants when outfitting your rental. They may be OK spending more on a lease for more upscale, sophisticated amenities. However, it's crucial to consider seasonal variation. You can do a lot to enhance the resident experience, such as providing additional comfort blankets for the winter and outdoor seating for the summer.
#5 Make a Unique Listing
You will probably have to compete for attention in a sea of similar rentals no matter where you choose to market your vacation rental. There are some measures you can take to distinguish your listing:
— Update your Listing Regularly
You may target a broader spectrum of visitors who could be traveling throughout changing seasons by periodically updating your ads. For instance, you could mention the beach during the summer and various indoor pleasures in the neighborhood in the winter.
— Make Your Ads More Personable
After all, visitors to your establishment will likely be on vacation, so they'll be drawn to locations that seem less formal and uptight and more laid back and enjoyable.
— Highlight Nearby Attractions
Bring attention to the nearby restaurants, sights, and other activities.
It's common for recommendations of places to go to be significantly regarded and enjoyed by first-time guests to the area.
— Photos are Important
Investing in top-notch imagery is essential to minimize your vacancy periods. It's worthwhile using a quality camera or hiring a skilled photographer. In this manner, visitors will be prepared before showing up.
#6 Set Competitive Prices
The optimal rental price setting is an issue in managing short-term rental properties. The rental cost, facilities, region, living space, and other factors are all factors that you might consider.
It could take trial and error to figure out what you ought to charge, and you might need to change the rental cost according to the time of year.
You should conduct exhaustive research before setting your short-term rental rates. Use services like those described above as a resource to see what similar homes in similar areas are asking for when renting out their spaces.
Whether you're an investor or a homeowner, managing your short-term rental property can be overwhelming. You must understand all the ins and outs of marketing, customer service, accounting, and more. We know it can take a lot of work to find the time and energy needed to manage a rental property. Luckily, you can always hire a professional short-term rental property manager.
The short-term rental market is booming. And savvy investors across the country are taking advantage of the high-income potential that short-term vacation rentals provide.
The great news is that The Short Term Shop makes it easier than ever to find the best short-term rentals in the most profitable markets. You can go through multiple listings to discover vacation rentals that suit your investment style and needs.