Short-term rentals have gone from being a passive form of income to a significant Investment venture for investors. Due to the lucrative nature of these residential units, more and more real estate investors are diving into the short rental market, making the industry more competitive than ever.
This competitiveness means investors who want to add short-term rental properties to their asset portfolio need to enter the market at the top of their game.
If you’ve recently kickstarted a short-term rental company or you’re planning to, this article will provide some helpful tips to help you thrive in the industry. Let’s dive in:
What Are Short-Term Rentals?
Short-term rentals are residential units with a lease of fewer than 12 months. These units can be any kind of home, including single and multi-family homes and luxury apartments. Check Mountain View apartments for rent to view all available apartments with photos, videos, price and list of amenities.
Typically, short-term rentals are vacation homes; however, they can also serve as residencies for people who want a place for a short while. That said, although residents don’t occupy short-term rentals for a long time, these properties require significant time and effort to manage.
Property managers need to constantly invest resources to make their properties fit clients’ needs in an ever-evolving and competitive market.
How Profitable Are Short-Term Rentals?
On the face of it, short-term rentals seem like a lucrative investment. After all, the projected revenue for the market in 2022 is $81 billion.
However, like every other real estate asset class, several factors contribute to the success of owning a short term rental company.
For example, location is a crucial factor if you’re investing in vacation homes because the best short term rental markets for these properties are typically vacation destinations. However, not all vacation destinations have the same profit potential; some cities are more profitable than others.
As such, you’ll need to conduct adequate research to find out the best areas to buy your vacation rental. Don’t assume you already know the best investment locations.
Short-term rental analytic tools, such as Mashvisor and AllTheRooms, can assist you with the data you need to find the most lucrative destinations.
You’ll also need to pay attention to local property laws. Some cities in the US have regulations that define how long an occupant can stay in a short-term rental, and others have banned these types of properties outrightly. Also check the best time to sell a rental property which will help you to grow this business fast.
In those locations with strict laws, the average profit on rental properties may be significantly lower than in areas where these rules don’t exist.
Furthermore, it’d help if you learned about the terms and conditions for different properties in listing services, such as Airbnb, so you’ll know how to market your rental on these platforms.
5 Tips to Help You Run Profitable Short Term Rentals
The short-term rental market is competitive. As such, if you run a short term rental company, you’ll need to go the extra mile to stay relevant in an ever-growing crowd of investors. That said, here are five tips that could make your short term rental reel in more income:
1-Optimize Your Daily Rate
Short-term rentals aren’t like long-term residencies, where you can set a fixed rent throughout the lease. Instead, vacation homes adopt a dynamic pricing strategy that allows you to set your rate daily, depending on supply, demand, and other crucial elements.
You can use some pricing tools to analyze the local market and adjust your rent accordingly. Airbnb has an in-built tool that automatically analyzes local market demand and sets your rate to match it.
However, there are third-party tools you can opt for if you’d prefer something more customizable, such as Wheelhouse, Beyond Pricing, and IGMS.
2 Invest in the Right Kind of Property
While investing in a great location is something investors often hear, choosing the right property is also crucial. In some investment destinations, the demand for your rental often depends on the type of home you’re offering.
For example, luxury apartments on the waterfront in beach areas attract more visitors than multi-family apartments. As such, you want to make sure you have the right property in place to increase the demand.
3 Get Creative With Marketing in the Off-Season
It’s easier to market your short-term rental during the holidays and bring in occupants. However, there’s much more work to do to get tenants in the off-season. You’ll need to get creative and tweak your marketing strategy a bit to compete among other vacation rentals.
Some of the strategies you can try include offering something your competitors don’t have in their properties, taking advantage of local events in your marketing, and optimizing your property to rank high on your listing platform’s search results.
4 Don’t Ignore Maintenance
In traditional apartments, tenants typically have to maintain the property. However, in the short-term rental industry, visitors expect the property to be in the best shape whenever they move in.
As such, you may need to regularly clean up your vacation home if you want to keep your customers. Scheduling your maintenance weekly or monthly is a great way to do this.
If you live in the same city or state as your short-term rental, then a weekly cleanup is the ideal option. However, a monthly maintenance check would be better if you’re into real estate investing out of state.
That said, to save you the stress of traveling often, you could hire a property manager to handle the inspection and maintenance for you.
5 Focus on Repeat Business
Getting customers to return to your rental is an excellent way to maintain your occupancy rate. You can encourage repeat business by giving guests discounts and referral rewards for referring friends to your rental.
You could also offer returning guests amenities that they didn’t have access to on their first visits, such as WiFi, earplugs, welcome snacks and beverages, and blackout curtains.
Furthermore, if you’ve made an upgrade to the apartment, you could send a message to previous guests to let them know you’ve upgraded the property to provide them better service.
Also read: How To Sell Your House in Liberty Hill, Texas, Quickly
Conclusion
Short-term rentals are an excellent way for real estate investors to earn a significant income. However, with more investors pouring into the market, you’ll need to put in some extra effort to stand out from the crowd.
Carrying out adequate research before diving into the market is one way to know the proper steps to take. You can take advantage of some online platforms that have access to market data, such as https://theshorttermshop.com/, to help you navigate the market.
That said, the most crucial factor to keep in mind is that short-term rentals require more effort and time to manage than traditional apartments, so get ready to put in some work.