The short-term rental (STR) market is hot and everyone connected to it is seeing rising profits and rising residence values, along with long-term success, as a result of travelers who now ignore the large, standard hotel rooms in favor of short-term vacation rentals. With a market that’s red hot such as this, why jump into it? Wouldn’t it be smarter to wait until the STR market cools a bit? There’s wisdom in asking the question, however, there are two reasons to enter the STR market: first, because no one else is doing it and, second, because everyone is doing it. Let’s talk about some of the essentials of owning and running your vacation rental business.
You’ll want to purchase a residence if you don’t already own one. Look for one that is suitable for use as a rental and consider the average needs of a rental property, including adequate sleeping quarters and bathrooms, a fully-stocked kitchen, a comfortable living area and, if possible, an outdoor area with recreational opportunities. These are simple expectations; however, the owners often delight in adding amenities and providing excursions in addition to the STR. Such is the nature of clever rental home owners who see the possibilities of differentiation from other homes listed.
After purchasing a residence, you’ll want to complete a vacation rental business plan to fully prepare for launching the business and growing it during the first years in the hospitality industry. Inside the plan, you’ll place completed major segments of the business, with each adding to the other. The major components of the plan include the following:
- Assessment of target audience: who will your customers be and what will they share in common?
- Analytics of the competition: there’s definitely competition throughout the country; however, there’s also differentiation to set your business apart from the others.
- Financial plan and forecast: A working business plan will include a financial plan and a forecast of income and expenses to come. This is helpful for lenders or investors who are considering funding the business.
- Operational plan: This segment of the business plan outlines the roles and responsibilities of those who are running the day-to-day business. An efficiently-run STR is a profitable one. especially when everyone knows the role they hold and individual responsibilities attached to it.
- Marketing strategies: The strategic marketing of a STR counts. If the images are poor or the rental is described without flair or attraction, chances are the STR will sit empty. On the other hand, an STR that is fully supported across all platforms, marketed in a story of pleasure, beauty and reset will present an enticing picture to renters who will book it up quickly.
- Mission statement and objectives: These summaries for the “why” behind the business and the objectives that the owner hopes to achieve are prepared at the end of this process.
With the completion of your business plan, you can obtain funding from a lender or an investor, if startup funds are required. Store your business plan where you can refer to it often, as it is the roadmap of your business. The next steps to starting your STR business continue with these efforts:
Determine what the local laws and regulations require for a STR residence. Each locality has its own rules; check them out and obtain any permits or licenses needed to use your residence as a STR.
Begin working on the math needed to estimate the expenses of operating the home, including cleaning, maintenance, yardwork, and other items. At the same time, begin researching the rents other homes in the same area are collecting as STR residences. You’ll want to keep your rental fees in line with other offers, while covering the costs of operations and upkeep.
Start choosing amenities and excursion packages for the guests, if you’ve decided to add those to the rental property. Many STR owners make a tidy sum of additional profit in adding such services. Amenities may include lux towels and linens, high-end appointments and high-quality outdoor grills or pizza ovens.
Creating a listing on AirBnb, VRBO and other area rental sites. Include stellar images of the property, along with detailed images of the interior of the residence, amenities and beauty shots of the surrounding area. Be very specific about the items included in the rental and include helpful contact information.
After listing your STR property, no doubt you’ll discover several additional items to add to your listing, along with several ideas to add to your rental packages. This all adds up to a wonderful experience for those who rent your STR and long-term growth and profitability for you. It’s a win-win!