While short-term rental investment is a booming business, it is becoming increasingly vital for investors to up their game. This is both in their investment approach and marketing strategy. Do you want to invest in short-term rentals and wondering how you can get the most out of them? Here is how you can remain on top of the game when investing in short-term rentals.
Location Is Key
Short-term rentals are dependent on location. When it comes to such investments, not all locations are ideal — some are great while others can be disastrous. In fact, data from AirDNA points this fact out in a clear manner: it is hard to get a high-profit spot for investment purposes. In the past years, there has been a negative correlation between gross revenue and home prices, with homes in high-demand areas like Seattle, Portland, and Hollywood bringing some of the slimmest profit margins. So, what are the most profitable spots for short-term rentals?
There are smaller cities like Tennessee, Gatlinburg, Florida, and Palm Springs. In Tennessee, for example, the median Airbnb profit is over $40,000 per year. Similarly, in a city like Florida, short-term rental investors make an upward of $125,000 annually. Therefore, it is vital to do your due diligence and narrow down on the most profitable locations you can invest in. You can use tools like AllTheRooms, AirDNA, and Mashvisor to analyze ideal places. It is also good to study the local laws and housing regulations before investing. Some city municipalities have limited or banned short-term rental in recent years. Besides, a majority of HAO rules are against this venture. By studying local laws, you avoid investing in areas where your business faces legal obstruction.
Get The Right Price Listing and Adjust It Often
In the world of short-term rentals, rates are not set once and forgotten. When you choose a permanent bargain-based rate, you might bring in customers; but will it bring in profits? The answer is likely no. Your best bet to making profits with short-term rentals is a dynamic pricing strategy. Have a pricing strategy that takes into account local supply, account timing, demand, and more. Platforms like Airbnb have a built-in tool that helps you to automatically adjust the pricing based on demand.
However, if you are looking for additional data and a more personalized approach, you can get an outside pricing tool. This will help set the correct prices for your business. When picking prices, you should do so with long-term goals in mind. For instance, getting $350 a night sounds lucrative, but it won’t be the case if only one of 100 travelers books it. This means you won’t be making enough money. Chances of getting clients can also reduce if you don’t have good prices. Therefore, evaluate the demand and come up with prices that favour the customer. You adjust them accordingly to make sure you are making profits.
Understand the Off-Season Market
You can easily make profits when your vacation house is in high demand. However, in the off-season, it takes extensive creativity and innovative marketing strategy to keep the bookings coming. Here are the three ways you can get it done;
Take Advantage of Local Events
You should stay tuned to concert venues, community calendars, athletic teams performance halls, and local organizations. Use these openings to guide your marketing strategy. You should also tailor your photos, listing description, and even your headline to the travelers that you know are coming on. It is also ideal for reaching out to local event organizers and recommending your space. If possible, include your space in any websites or brochures you might get.
Get Better than Your Competition
You should offer something that your competitors don’t. For instance, have more amenities, give affordable prices or even a better location. These are the features that travelers look for, and they will reach out and book their rooms right away!
Rank High in Searches
During the off-season, one of the most reliable ways to get bookings is to be the first listing a traveller can see when they search the internet. Achieving that is not easy. You need an excellent balance of descriptive listings, outstanding photos, a fully-built amenities section, positive feedback, and good ratings. If you have worked with a customer before, you can reach out to them and ask if they will be visiting again soon. This will give you an opportunity to convince them to book your short-term rental. That’s how you get the bookings coming!
Encourage Repeat Business
You might only be working with your customers on a short-term basis, but if you can get their business for the long-term, you will get better returns and profits. You might be aware of ways you can encourage repeat business. For example, you can offer an excellent and unique experience that will encourage customers to come back next time. You can also do so by being responsive and catering for the needs of your clients. While those are the basic ways of encouraging repeat business, they are more creative ways you can do so. You can try;
- Offering friend discounts: You can give your guests referral rewards or discount codes. Encourage them to send their friends and colleagues your way. This is crucial, especially if they have a connection with regular short-term rental users. While it might not be repeat business per se, it is additional business from a former client. This increases your income and profits.
- Generate leads: Most businesses survive on lead generation. If you know anyone that would be interested in using your services, reach out to them and let them know what you offer. You shouldn’t always wait for customers to come to you — go to them as well. Market your short-term rental by mentioning some of the outstanding amenities you might have. Give them reasons why they should stay on your property. This will help convince a number of new clients.
- Target business travelers: Business travelers often need places to stay while they attend business meetings and other errands. They will need regular lodging for a long-term basis, especially if their errands occur regularly. Target such individuals in your listing descriptions and offer business-friendly amenities. Amenities like super-fast WiFi, earplugs, and blackout curtains are great amenities for businessmen. If possible, you can consider investing in properties near airports, conference centres, or other areas frequented by people on travel.
Update Guests On New Developments
If you have worked with a guest before, it is helpful to get in touch with them and update them on new developments. Did you add a hot tub in the bathroom? Is there a business conference happening across the street? Contac former guests and update them on the changes. Telling them such information might trigger another staycation, as they might be lured with the new developments. You should also update them on new developments around the city, like an upcoming concert where pop stars will be performing.
Keep Maintenance Updated
No one wants to stay in a house with poor living conditions. Most renters want a well-maintained space with excellent living conditions. As a business owner, you shouldn’t let them down. Well-maintained properties will get regular and consistent bookings as well as excellent reviews. If you take your clients seriously and want to keep them happy, you should create a maintenance schedule that you adhere to fully. If you don’t have the skills to maintain the property, you can outsource from experienced cleaners. You can also hire the services of a real estate maintenance team that ensures your property remains in excellent condition. Remember that lack of proper maintenance will not only affect your ratings but also see you to lose clients.
Customer Service Should Be Top Notch
Any successful business is based on excellent customer service. The same applies to real estate. While it might be easier to work in an area with fewer listings, you have to give excellent customer service if your rental is located in a city with many short-term rentals. The competition is fierce, and you must do everything to remain at the top.
If your short-term rental property is located in an area where you have to face thousands of properties, you have to go above and beyond to attract clients. This can be done by providing them with better amenities, answering their questions, giving them extra inflammation about the area, and addressing their needs in a timely fashion. Customers will leave a great review if they see you are trying your best. This will result in more bookings.
Keep Your Records Straight
As a short-term rental business operator, you can get bogged down by things like maintenance, guest screening, reviews, and listings. This is likely to be the case when you have guests on your property every week. Nonetheless, you must remain organized even when there is a lot on your hands. Managing such records can be tedious, especially when you are handling them alone. This includes keeping an eye on maintenance bills, property taxes, permits, insurance, and other expenses that come your way. Failure to do so, your business might start experiencing setbacks.
Therefore, if you feel that the volume of work is too much for you to handle, you can hire a professional management company that helps owners manage the property. Such companies also help short-term rentals develop and maintain a constant supply of guests. Hiring such services is a great way for you to learn how to manage the business. You will gain skills that will give you better management capabilities.
Conclusion
A short-term rental property is one of the most reliable ways of generating steady income per month. As much as it is often considered a form of passive income, you need real estate prowess to run a short-term rental property. You also need financial and time investment and excellent communication skills to communicate with clients. With favourable market conditions and the right management, a real estate investment can become a successful enterprise that makes you thousands of dollars annually.
