In 2018, Forbes reported that the short-term rental market had risen to an estimated market valuation of $169 billion. Since then, the market has been growing tremendously. If you’re thinking of venturing into the short-term rental market space, this is the perfect time for you.
Now that you’ve realized the dream, it’s time you know how to start. Short-term rentals are also referred to as vacation rentals and are privately owned properties rented out to travelers on a daily, weekly, or monthly basis, hence the term short term.
The major difference between a short-term rental and a hotel is that they offer a more personal feel to rented accommodation. Vacation rentals also provide better access to the local culture, a feeling of home, and privacy when compared to a hotel.
To know more about short-term rentals, their uniqueness, and available vacation rental properties for sale, visit https://theshorttermshop.com/. Meanwhile, let’s explore some of the things you’ll need to know on how to start a short-term rental business.
Local Zoning Laws
Before you consider starting a short-term rental business in any location, the zonal laws of that location should be your first thought. Thanks to the success of famous short-term rentals corporations like Airbnb and Vrbo, most cities are now passing regulations that’ll help support short-term rentals. But these regulations vary.
Some laws limit the number of guests permitted at a single time; others only allow primary residences to have short-term rentals. In some cities, short-term rentals are illegal. Honolulu, Hawaii, charges a $10,000 fine to people caught offering short-term rentals.
The property you own might have some regulations preventing short-term rentals. If it’s a leased property, check your lease agreement and ensure that subletting is legal. Your neighborhood Homeowner Associations (HOAs) might also have laws against short-term rentals.
Complete these checks before making further progress because it’s simply the first and most important step when learning how to start a short-term rental business.
A Business Plan
Even the most brilliant business can fail without proper planning. You’ll need a short-term rental business plan if you want to succeed in the field. This plan will help you identify potential mistakes, solutions, and the best ways to make profits.
When preparing a short-term rental business plan, keeping it realistic and specific is ideal. Expected monthly and annual revenues should be outlined. The business plan should also outline your short and long-term goals.
Also, don’t ignore the running cost. Compared to long-term rentals, the cost of running a short-term rental is pretty high. Due to the regular changing of occupants, a constant restock of personal items like toilet paper, towels, and bedsheets is required. There’s also the cost of cleaning the place after every guest.
An Ideal Location
The great thing about short-term rentals is that you can establish them anywhere. Once you’ve cleared your property with the law, you can start a short-term rental anywhere. But like every business, some locations are simply better than others. The logic is quite simple. If you want to know how to start a vacation rental business that’ll be successful, find out where people like to go for vacations.
Verified metrics like cash-on-cash return, cap rates, and the number of rented days per month needed to generate revenue that’ll cover the building’s mortgage can help you decide the most profitable location.
Reports have also shown that buying a house previously used as a short rental can help kick-start the business.
Know Your Guests
A 2022 AirDNA report shows that the short-term rental listing will grow by 15 percent in 2022. The competition is also increasing, and staying ahead will require you to stand out.
To do this, you’ll have to set your home according to the guests you are expecting. If you’re expecting a family with kids, your interior design should be planned with that in mind. Also, make arrangements for pets and disabilities available if you expect such guests.
Guests who enjoyed their stay will frequently revisit and recommend your rental to others.
There is nothing wrong with setting your price lower than the competition, but ensuring it doesn’t affect the cost of running the business is paramount. Long-term rentals like hotels mostly change their pricing once or twice a year. In short-term rentals, prices can go up or go down in days or weeks. So if you want to know how to start a vacation rental business, you must understand the pricing dynamics.
Pricing might change based on season, competition, and time. For example, if your short-term rental targets business people, you can offer discounts for weekends. If it’s mainly for weekend getaways, you can lower your prices during weekdays.
Finally, your pricing should cover the mortgage, laundry and cleaning services, business and license fees, new appliances, and repairs.
After you’ve finalized pricing, location, and other formalities, listing on platforms should be the next on your list. Luckily, the short-term rental business is booming, and there are over a dozen platforms you can list your own.
Naturally, Airbnb and Vrbo are the first options. Due to the number of people who use them, your chances of getting reservations are pretty high. You can also list on other platforms like Expedia, Booking.com, and TripAdvisor.
Learning how to start a Vrbo business that’ll be successful is not difficult; it takes time and dedication. Focus on pushing your business. Don’t just list; promote yourself aggressively on social media platforms like Instagram, Pinterest, and Facebook. Tell your friends and family to help you post. Social media has proven to be an effective tool in promoting short-term rentals.
The Bottom Line
We’ve managed to show you how to start a short-term rental business; now nothing is stopping you from realizing your dream. Follow the tips we mentioned above to get your short-term rental business up and running. After you might have started getting reservations, look for good software that’ll help you organize schedules and ensure things don’t get mixed up.