With the vacation rental industry being a relatively new one, it’s often hard to know who to trust when it comes to advice. There’s quite a few voices out there offering their thoughts on how to succeed, but how many are experienced? In an effort to help first-time VRMs avoid common entry-level pitfalls, we consulted the experts.
The Greatest Teacher…
There’s a proverb you’ll hear frequently when seeking advice in starting a vacation rental business: “experience is the greatest teacher of all”. There’s no denying it, but that doesn’t mean you can’t prepare yourself and make your experience easier.
Do you have to lose all of your money just to learn how to research your market? Probably not. Perhaps it’d drive the point home a little harder, but you’re much better off taking some advice on this matter.
Misconception #1: It’s easy to rent out your home.
Large platforms like VRBO and Airbnb make it look simple to manage a vacation rental listing. Many think they purchase the home or use their existing property, furnish, take some photos, and collect the rent. However, it in reality it can take between 8-10 hours per week just to manage inquiries, calendars, and provide guest services to in-house guests. This time does not account for cleaning in between guests, washing and changing linens, and maintenance needs, which may be an additional 2-8 hours depending on the size of the home.
Lindsay Bolton | Finger Lakes Premier Properties
Key Takeaways: Don’t underestimate the time and effort you’ll have to put into managing your vacation rental. If you’re not sure you can make a full-time commitment, have some helpful resources lined up and ready to take over. Take these services into account when calculating your ROI, even if it’s just a possibility.
Misconception #2: The profits outweigh the risks.
While profits for vacation rentals are significantly higher than long-term rentals, there is quite a bit of risk involved. You can estimate what people will pay, occupancy rates, and seasonality with credible data and still be wrong on a number of expectations. At the end of the day, you could make the investment and your transient rental could be found to be illegal by your local government at their whim.
Veronica Hanson | Vacay Visionary
Key Takeaways: Research your market, learn the risks. You need to know who you’re competing with and your projected income. This will prepare you enough to know what size investment you can make without setting yourself up for failure.
Misconception #3: You have to do everything yourself.
The biggest misconception we see with new vacation rental owners is that they think they’ll save a ton of money by handing their vacation rental all by themselves. They take their own photos, create a listing on a couple vacation rental websites, and confidently believe that owning a vacation rental is going to be as much fun as going on the vacation.
Over time communication with potential renters begins to lag, they start to cut corners when cleaning the unit, renters aren’t thoroughly vetted, poor reviews start to poor in, and they’re left wondering why they struggle to keep their vacation rental booked.
Evan Roberts | Dependable Homebuyers
Key Takeaways: Work with others wherever possible – chances are that their services will factor into your cost/revenue projections quite comfortably. Utilize software solutions to help manage your channels. Consider working with short-term rental management companies if you’d like to minimize your effort.
Misconception #4: You can cut corners.
A misconception I think [first-timers] may have is the actual quality standard of accommodations, especially if one is used to cutting corners and doing bare minimum maintenance in an attempt to maximize profit. Not long ago, when you looked at photos of short-term housing homes they may have looked like your great grandmother’s house, complete with old knotty pine furniture and patchwork bed covers. These days you can find spacious, sleek homes in pleasant surroundings with state of the art amenities that can only be resembled to a resort (fitness clubs, theatre rooms, swimming pools, golf simulators, etc.). Your short-term housing option of today will likely have a fully fitted kitchen, a washer, and dryer inside the home and 300% more space than a hotel.
Steve Patterson | UrHomeInPhilly
Key Takeaways: The standards for the vacation rental industry are high. Preparing your property and having a rigorous maintenance schedule is imperative. An initial investment for furnishings is recommended – what’s good enough for you isn’t necessarily good enough for everyone. You need to compare favorably to your competition if you want bookings, and they’ve already met this standard.
Misconception #5: Your rental is worth a set rate for the whole year.
Setting the right rates is one of the main struggles for any vacation rental company or manager. No longer can you set only peak and off season rates. Larger companies have developed software to monitor and adjust rates of their vacation rentals daily, just as an airline regulates their rates. The manager must be cognizant of their competitors and tourism trends in the area. They must be able to balance the rate in a highly competitive industry where if it is too high you will be overlooked, but too low and you are leaving money on the table, possibly not covering the overhead costs of managing the home.
Lindsay Bolton | Finger Lakes Premier Properties
Key Takeaways: You need to adjust your strategy and remain fluid for a long time before you finally get learn the ebb and flow of your seasonal traffic. Again, your market research is also imperative here.
A great strategy is to find similar vacation rental properties in your area (aka competitors) and study them. Check on them regularly to see if their rates have shifted. If your bookings drop off, the first place you should look is at your competitors. Learn from them.