The potential to create revenue or offset housing costs through short-term rentals like vacation rental properties is attractive. Thanks to the accessibility afforded by platforms like Airbnb and HomeAway, the vacation rental industry is expected to generate $57.669 billion dollars in revenue by the end of 2019.
How much can someone make from short-term rentals? One analysis found the average Airbnb host’s income is $20,619 per year. Potential income fluctuates based on variables like the host’s expenses, property location, and occupancy. The key behind driving profit lies in maximizing the money on vacation rental properties while reducing expenses. Increase the returns on vacation rental properties with:
1. Strategic property acquisition
Profit starts by purchasing the right property at the right time in the right neighborhood. Research the housing market trends to find properties with the best potential to generate revenue. Ideal properties are close to amenities that draw vacation renters. For example, a property within walking distance to the beach is more attractive than a property a 5-10 minute drive away.
Don’t think your area could be profitable? AirDNA crunched the numbers on AirBnB data to find a correlation between housing cost and profitability. Some of the best cities for a high gross profit were Savannah and Nashville. Popular cities like San Diego and Seattle had a much lower return, but even here, the study acknowledged profitability varied based on local neighborhoods. Look for San Diego condos for sale or Seattle condos if you want to make revenue. Condos are less expensive than houses.
Look for properties in high demand locations, like urban centers or near popular tourist destinations. It may cost slightly more to buy a vacation rental in these areas, but they are more likely to be steadily booked.
2. Make the property attractive
Properties with a neutral but smartly decorated look appeal to a wider range of renters. Do make sure you refresh old paint jobs to keep the interior design in line with the area’s culture. A vacation rental in Jackson Hole Wyoming should playoff the Western motif while a Hollywood rental is better suited to a contemporary vibe. The local decor and included amenities make a huge difference in wooing renters to your property because they’re part of selling the experience of staying there.
Renters rely on photography when deciding to book the property. Investing in high-quality photography brings returns with more bookings. Images sell the story of what it will be like to stay at that property.
3. Smart vacation rental pricing
Keep your short-term rental listings competitive and drive profit using dynamic pricing. Local supply and demand constantly varies. Watch your competitors closely and analyze the market with tools such as AirDNA. During peak seasons, you might want to consider raising the price to maximize revenue. Software like iGMS will automate your pricing strategy to help keep your properties booked. It will add last-minute booking discounts and optimize the minimum stay requirement so owners getting the most value from their bookings.
4. Reduce vacation rental vacancies
Keeping the vacation rental booked for as many days as possible is the best way to make the properties more profitable. Don’t rely on a vacation rental platform as your primary source of bookings unless it is has the best vacation rental software. List the home on more than one networking platform. Do your own social media promotion. Together, you’ll reach more renters and diversify your potential renter pool.
Identify the peak periods in your neighborhood. Estimate how many days you want the properties to be booked during these periods. Make a plan to handle same-day turnovers so you can maximize occupancy. Think of ways to make your property attractive during off-periods.
5. Transparent pricing
While owners want to maximize earnings from their vacation rental business, guests also prefer not to be nickeled and dimed for everything. Study the pricing strategies of other top listings in the area. Be careful to keep your common fees in line with the market, such as the cleaning fees a minimum night stay. Pay special attention to the little extra items other rentals include in the stay or offer as an add-on for an additional fee.
6. Automate to make money
Everything and anything that can automate, do it.According to ICC Property Management, automation tools may require a higher investment upfront, but they’ll reduce the day-to-day management tasks and time spent handling bookings. This frees vacation rental owners to focus on growing their business.
Automation includes everything from creating a checklist for your guest to follow to installing smart locks on the vacation rental property. Another idea to automate keyless check-in is using Keycafe – key exchange service. Adding automated home controls, like the thermostat and lighting, allows owners to adjust the settings when the property is vacant. This extra control helps reduce the utility costs.
Automated vacation rental software allows owners to automate repetitive tasks while improving communication with the tenants. For instance, iGMS will sync the property availability calendars across different vacation rental sites, maximizing the owner’s ability to market on different platforms. The software also manages the team behind the vacation rental property, like the cleaning and maintenance staff.
7. Value-add with experiences
People go on vacation to have great experiences. They want to take advantage of all the location has to offer, i.e., a vacationer renting in Napa likely wants to tour the vineyards. The best vacation property owners know how to sell the experience through the description, photos, and extra amenities. Airbnb offers vacation rental owners to sell unique Experiences, which is another way to increase what owners earn from each booking.
8. Generate positive reviews
Positive reviews are the bread-and-butter of the vacation rental industry. Cultivate positive feedback from every renter and maintain a high rating. Vacation rental properties with the highest rankings are more likely to stay booked and command higher rates.
9. Gather and track data
Vacation rental properties are a business. Measure its performance by tracking the data. Establish a benchmark to know how the rental is performing with bookings, expenses, and gross revenue. Start with week-over-week, and move to month-over-month and year-over-year as the property grows.
Automated vacation rental management software will help track the revenue, expenses, and booking data. Make a study of other information, such as when the property seems to be in the most demand and where the guests come from. Is there a particular group that seems consistently interested in the short term rental? For example, a downtown loft near a theater might attract performers looking for a place to stay while their show is in town. Investing more in marketing towards them could pay off with more bookings.
Making a profit from vacation rental properties
It’s possible to make money on vacation rental properties, but it comes down to thoughtful acquisition and active management. The best driver of income is to keep the properties booked. Dynamic and strategic pricing attracts renters and lands last-minute bookings. Today’s automated vacation rental software helps manage the booking process while delivering exceptional client service.
