As a 12-year veteran real estate investor, I have seen many people develop an effective system to make money from vacation rentals. This 9-step approach helps you increase the revenue you receive from a second home or vacation rental property.
The industry of vacation rentals is quickly growing. Airbnb changed the way we look at accommodation options during vacations or any type of trip.
Vacation rentals are increasingly popular and are becoming a source of significant income for real estate investors.
We will discuss the nine steps you can take to make your vacation rental property the most profitable. Let’s begin!
9 Steps to Make Money on a Vacation Rental
Step 1: Choose the Right Vacation Rental Property
To choose the ideal vacation rental property, you must consider the following factors:
Choose properties that are near or in the middle of city centers close to popular attractions, which are the most commonly selected by renters.
Put yourself in your customer’s shoes and think about where you would want to stay during your trip.
Seasonal vs. Year-Round
Since you’re interested in year-long profits, choose a property that is accessible all year-round instead of only during particular seasons. Places such as South Florida are visited both during the summer and winter months.
Check city ordinances and homeowner association policies about vacation rentals and if see if there are limitations on the number of guests that can stay, parking options, and other factors. Of course, the bigger the place, the higher the rate you may charge. However, a place that is too big, may not be popular for most vacationers.
Step 2: Furnish the Property Properly
The more beautiful and comfortable the unit is, the more popular it will be. Lush decorations and furnishings pay for themselves very quickly as you’re able to charge a higher rate for the extra comforts.
Having stylish decor helps you to easily promote the property and increases the chances you’ll receive positive customer reviews.
There are easy and inexpensive ways you can improve the appearance and comfort of your property.
Step 3: Brand Yourself Well
The more professional you appear, the more customers will rent from you. You can increase the quality of your listing by hiring professionals to do your marketing.
For instance, hire a professional photographer instead of using your phone’s camera.
Use technological tools such as virtual tours to offer more options to potential customers as they navigate the market. Be clear and concise with your content, enlist the help of a professional writer if necessary.
Remember, you can only make one first impression!
Choose a name for your company and even go as far as naming your unit(s). A fun way to do this is by choosing something related to the destination.
For example, one of your units can be named after the state bird or something else present in the area.
Step 4: Upgrade Amenities
There are several offerings that will draw customers in. Here are some things that increase your property’s online visibility:
- Become pet friendly
- Add a hot tub or steam shower
- Provide reliable free WiFi
Step 5: Choose Competitive Rates
Rates are not meant to be fixed all year long. If you learn how to maximize your profits by staying competitive with your rates, you will make a huge difference on your balance sheet at the end of the year.
Technology is a great way to stay current on industry trends that can affect the rates you charge. Some real estate investors opt for working with industry professionals that help them manage their pricing and bookings.
Step 6: Manage Your Calendar Well
This is perhaps one of the most important tasks you can complete routinely and one that can make or break your profitability. Follow these tips to manage your calendar effectively:
Skip Minimum Stay Requirements
Make it as easy as possible for anyone that considers renting your vacation property. People don’t want to be limited and are looking for flexible bookings. It is better to receive revenue from one night than zero.
Splurge on Marketing
If no one sees your listing, no one will rent it. Therefore, invest in quality marketing efforts that will put your property on the main pages of search results.
Various platforms are tailored to your type of listing, which means you can target your advertising efforts.
If you allow your listing to be managed by a vacation rental management company, you’ll likely increase your visibility. Letting the pros take over may seem counterintuitive, but it can increase your revenue significantly.
Professional marketing efforts include:
1. Search engine optimization (SEO):
Search engines bring up the best results on the listings that have the right keywords and signals.
2. Pay-Per-Click (PPC) advertising:
These types of ads will help your listing appear on the top of the search results. Your sponsored ads will be visible to those who search for targeted keywords.
3. Display advertising:
You can increase your visibility by purchasing display ads that pop up as prospects are navigating certain sites or social media platforms. These ads include attractive pictures to capture people’s interest.
Step 7: Build Trust and Loyalty From Guests
Making guests feel the most welcomed pays off with good reviews and referrals. In the world of online connectivity, consumers immediately search the internet to find details about a product or service through the eyes of those who have experienced it first hand.
The more positive consumer reviews you collect, the more you’ll enjoy the following benefits:
More Demand For Your Listing
Simply put, customers are more likely to choose listings that have a large number of positive online reviews.
The more reviews you have, the better your rankings will be in search results. You will have more visibility when you appear on the first and second page of search results on engines such as Google.
Repeat Customers and Referrals
Happy customers that leave your vacation rental are likely to come back for another stay. They will also be inclined to recommend your property to their friends and family.
Building loyalty requires you to provide a memorable experience.
Part of that effort is to have a system in place that quickly resolves any issues customers may experience before, during, and after their reservation. Great customer support goes a long way in becoming a top listing.
Step 8: Improve on Constructive Criticism
One of the most valuable parts about bad reviews is the honest feedback you may receive that can help you improve your vacation rental. You have to realize that this type of business requires you constantly make improvements.
Whether you update the property from normal wear and tear, or you change your offerings, the nature of this business is to constantly make changes to accommodate market demands.
Plus, if you make improvements suggested by customers, you will demonstrate dedication to your renters.
People want to rent from owners that truly care and are invested in the relationships they maintain with their customers. It creates loyalty and may even win over some customers that got away.
Step 9: Hire Professionals to Manage Your Property
As mentioned earlier, hiring a vacation rental management company can skyrocket your revenue. Allowing a comprehensive management company to take care of every aspect of your vacation rental ensures that you will provide the best service for your customers.
You have to remember that your time is precious. The time you spend with the routine tasks takes you away from doing things that can continue to grow your business.
Or, it simply frees your time so that you can go out and enjoy your profits.
Management companies are familiar with the industry tools that will maximize your income potential. They work with a network of techs, housekeepers, and managers that will keep your property operating optimally.
You don’t have to make renting a vacation property another job. Working with the right company will make it very easy for you. There is no comparison of what a management company can do compared to doing it all on your own.
Final Thoughts on Making Money From Vacation Rentals
Now that you have an idea of what it takes to make money from vacation rentals, it is time for you to start planning your next investment deal.
It is absolutely rewarding to have a vacation rental that can make consistent profits without much of your time. The industry will continue to expand as more people are preferring private homes over hotel stays.
What type of vacation rental properties do you see yourself owning? What are some of the hurdles you feel can get in your way?
Please leave your comments below, I would love to hear from you.
Thank you for reading this post on How To Make Money On A Vacation Rental, I hope you found it useful. Have a great day.