Have you always dreamed of starting a vacation rental business but didn’t know where to even begin? It can be overwhelming, especially with the industry growing more competitive each day. That’s why we’ve compiled everything you need to know in six essential steps—so you can stop dreaming and start building a successful short-term-rental business.
1. Create a business plan to set the foundation for your vacation rental business.
Starting a vacation rental business is just like building any new company from the ground up, so you’ll want a clear set of actions to guide your way and help you reach your goals. A few must-haves that your short-term-rental business plan should include:
- Executive Summary – Think of this as the blurb in the back of a book—a concise look at what your vacation rental business is all about. (What type of house is it? Where is it located? What type of guests do you want to attract?)
- Business Goals – Set markers that help you define success for your short-term rental business. Determine how much you need to bring in to make a profit, and pin down whether this looks like a few bookings a month or a full calendar.
- Company & Industry Analysis – Research the area to find out what makes (or could make) your property stand out. (Are you beachfront? Do you offer discounts for local attractions? Is your home stocked with family-friendly amenities? Is there an untapped audience that your rental could cater to?)
- Operations Plan – Figure out how you’re going to run your business on the day-to-day and create a budget for it. (Are you going to clean the rental between stays or hire an agency? Who will handle bookings, communication, and complaints?)
2. Choose the right technology and vendors to help you start a vacation rental business.
Once you’ve set up a business plan, it’s time to start thinking bout how to make sure things run smoothly. That’s where smart technology and quality vendors come into play. Consider opting into several of these time and sanity-saving tools when you start a vacation rental business:
- Property Management System (PMS) – A PMS tool such as Futurestay automates, optimizes, and manages the day-to-day of your short-term-rental business in one place. It can send automated messages to guests, manage reservations from different platforms and automate payments—all on a central calendar.
- Smart Locks – Keyless entry is a must-have for vacation rentals in the post-Covid-19 world. Smart locks enable temporary access codes (sent via text, email or messaging dashboard) so self check-in can be managed from anywhere and at any time.
- Noise Protection – Privacy-safe noise monitoring gives you insight into what’s happening in your rental while guests are there. It alerts you to noise issues so you resolve them remotely, preventing neighbor complaints, fines and property damage.
- Housecleaning Service – Opt for housekeeping services that know the difference between standard house cleaning and vacation rental standards—aka having your home deep cleaned and guest-ready (i.e. checking to make sure the next guest has enough paper products or keeping an eye out for damage).
- Dynamic Pricing Tools – Avoid pricing your property too high or low with dynamic pricing. These tools adjust your listing’s price based on the supply and demand in your area (via the number of bookings happening in real-time).
3. Make a list and check it twice—prepare your short-term rental business for guests.
Now you’re ready to start preparing your property for guests. From deciding what to include in your vacation rental to determining how to keep it safe, here are a few tips:
- Get Necessary Permits – On top of a general business license, it’s likely that you’ll need a license or permit for short-term renting. Your local government website is a good place to start for more details.
- Build an Inventory Checklist – Deciding on special amenities and filling each room can feel like an arduous task, but following a checklist can make it more manageable. An added bonus? It can also help you verify damaged or missing items. Make sure you allocate your budget wisely, and understand what splurges pay off in great reviews, and where you can save money.
- Buy Insurance – Keep your property and renters safe with a specialized policy, like Proper Insurance, that covers the specific needs of vacation rentals. Make sure your vacation rental insurance covers property protection, liability coverage, and loss of income.
- Create a House Manual – Give your guests a user guide that covers all the details of your home (how to use the Smart TV remote, where to put recycling, where to find the pool toys, etc.) and the surrounding area (the best local nail salon, how to get to the beach, where to find best restaurant in the neighborhood, etc.). Make it durable and accessible, and put contact information upfront.
- Be a Good Neighbor – When starting a vacation rental business, it’s important to let your neighbors know about your operation (plus your permit may require it). Assure them that you’re doing all the things to prevent noise and disturbances and let them know how to contact you if needed.
4. Create a stellar property listing and let your Airbnb business shine.
Once you’ve sorted all the logistical details, the creative part can begin. A thoughtful listing description is what’s going to catch the eye of potential guests and make them pick your home over others in the area. Some pointers:
- Create a Show-stopping Description – Highlight the unique selling points of your home in the description, headline, and hero images. Consider giving your property a memorable name (i.e. “Beauty at the Beach”) to make it stand out.
- Invest in Professional Photos – A picture says a thousand words, especially when it comes to photos of your home. The quality of your images can determine whether or not guests click through to booking or keep browsing.
- Use Online Travel Agencies (OTAs) – An OTA (think Airbnb and Vrbo) provides an opportunity to list your property on their platform and increase your visibility—and your chances of getting booked. It also allows guests to use filters to narrow their search and align with what your Airbnb business has to offer (pet-friendly, ski-in/ski-out, etc).
- Pro-Tip: Consider creating a direct booking site when you start a vacation rental business. It will it save you the fees you pay to OTAs, so you can re-invest that money back into your property. And it can also lower prices for guests, leading to more bookings, and building brand loyalty.
5. Set your vacation rental business apart from the rest with a smart marketing plan.
In addition to a business and operations plan, you’ll also want to have your marketing plan nailed down. A few ideas on how and where to market your vacation rental business:
- OTAs – One of the best ways to market your vacation rental is to make sure it’s shown on the first landing page on your OTAs by maintaining a quick response rate, securing good reviews, and keeping your listing up-to-date.
- Social Media – Market your short-term-rental business on Instagram, Twitter, Facebook, and Pinterest to maximize exposure and build relationships with guests.
- Five-Star Reviews – Let guests know in your description that you’re committed to a five-star experience, then incorporate the rave reviews once they start rolling in. Also: It’s OK to ask for those five-star reviews when guests check out!
- Partnerships – Reach out to local businesses in your area and set up relationships where you can offer deals and promotions to your guests.
6. Know when it’s time to expand—from starting a vacation rental business to growing your portfolio.
Before you start expanding your portfolio, it’s important to make sure you’re not biting off more than you can chew. A few things to consider:
- Current Property/Properties – Evaluate how your current vacation rental business is doing and if you have strong enough guest reviews and a customer base that can carry over to new properties.
- Finances – Review your budget and examine how much it actually costs to run your vacation rental business. Take into consideration any surprise costs (a bathroom remodel or new roof) as well.
- Scale Your Technology – When you’re ready to add more properties, your PMS should be able to manage all your tasks and properties from a central hub. That way, you can grow and run your business on autopilot.