Before starting a vacation rental, you must ensure that you understand the industry and everything it entails. Factors like the climate season, location, and property value are pretty significant in this industry. So, read this article carefully before making any decisions:
How do I start a vacation rental business?
- Write a business plan – all businesses require some planning. Be prepared and do not go in without a plan.
- Research on the amount of money needed – have a budget for maintenance, upkeep, insurance, utility, marketing, and property taxes.
- Find a property – when it comes to a vacation rental business, there are two ways you can approach it.
First, invest in buying property in your desired vacation location, which you can use as a second home. Or, use rental arbitrage. This is when you rent property long term and rent it to tourists on short term periods. It’s a great way of making money without owning the property, but you need permission from the owner.
Ensure that you research marketable regions and seasons before investing in any properties. You can do this by researching properties and seeing what’s marketable.
- Look for financial options – since you already have a budget set in place, it’s time to find funding for your business. Several options available include; reverse mortgage, cash-out refinancing, business line of credit, home equity line of credit, traditional bank loan, and 401(k) loans.
- Furnish the property – furnishing is an essential part of this process. It’s what your clients will look at when determining whether to rent or not. Focus on lighting to improve the aesthetic of the space. Do not personalize; not everyone likes what you like.
- Invest in rental supplies – Stock your property with every essential needed. The bathroom, kitchen, and bedroom must all be equipped.
- Hire a cleaner – get a professional cleaner for your vacation rental. Having a clean space will impress guests and attract referrals and more people to rent. Also, good hygiene will ensure there are no health complaints from tenants.
- List your property – it’s time to advertise your rental and attract potential customers. You need to get perfect pictures of the property and wait for the clients to message you. Luckily, Airbnb, Book.com, and Vrbo have made this easier.
How to make the most out of a vacation rental property
The aim of any rental property is that the income would cover maintenance costs and still make a substantial amount of profit. So the annual cost and the rental potential will determine how much an investor will make from a property. The annual costs should be 1% of the purchase price. An investor must ensure that the property’s rental potential is higher than the annual costs.
Below are more ways you can maximize profit off a vacation rental:
- Create an impressive listing
- Market your home outside the listings
- Decide on the correct rate. Ensure that your rates cover all the rental’s expenses
- Make the place look incredible
Starting a vacation rental is not simple. Although, the income is relatively high compared to regular rentals. Ensure that you ask for help whenever necessary or hire a management team if it becomes overwhelming. Take your time, and don’t rush into anything, and you’ll see profits flowing in.