The summer vacation season is coming. Travelers will leave their homes to catch some fun and sun in their favorite tourist destination. Many tourists have booked smaller accommodations, like vacation rental homes, for their trips. These are private residences that people rent out to guests. This market has exploded over the past decade and continues to grow exponentially. Right now, vacation homeowners have started spring cleaning their rentals to prepare for summer guests. If you’ve dreamed of starting your own vacation rental home business for the summer, it’s not too late. We’ve provided a 10-step vacation rental checklist to help aspiring entrepreneurs get started in this business.
- Select a Vacation Rental That’s Appealing to Travelers
- Conduct Market Research on Vacation Rentals in Your Area
- Prepare Your Property for Vacation Guests
- Add Luxurious Touches to Your Rental Property
- Take Professional Shots of Your Rental Home
- Price Your Rental Home for Year-Round Success
- Pay Taxes on Your Rental Property
- Buy Enough Insurance to Protect Yourself and Your Guests
- Create Rental Agreements for Your Guests
- Reach Out to Your Guests and Ask for Reviews
1. Select a Vacation Rental That’s Appealing to Travelers
Vacation home rentals have skyrocketed in popularity over the past few years. These are short-term accommodations that vacationers can rent during a limited time window. Rentals can include homes, apartments, condos, villas, boats, and luxury properties. They provide similar services to a full-service hotel at competitive rates, but they allow guests to stay in intimate, private settings.
According to data firms STR and AirDNA, short-term rentals were popular last year because they allowed for more privacy and seclusion compared to hotels. It also allowed guests to enjoy full-service amenities, such as kitchens and other items. The average stay for guests increased 58 percent during the pandemic.
Have you decided that buying a vacation rental property is the right business for you? If so, you’ll need to find the ideal property. First, you must conduct a real estate market analysis of the area. There are online tools that can help learn the median home prices of different neighborhoods. Next, use a heatmap analysis tool to browse through neighborhoods with investment properties for sale. Additionally, search through rental property sites to find out the demand for similar rental properties in that area. It won’t make sense to invest in an area where the market is low. You can use online apps to calculate the property’s expected rental income and occupancy rates.
When searching for a property, look for rentals that authentically symbolize the vacation destination. For instance, if your vacation area is famous for its beaches, you can opt for a beautiful seaside home. If it’s an art district in a southwestern city, there may be a bungalow you can purchase as your property. If it’s a ski village in a mountainous area, a charming chalet may be the perfect home.
These themed rental homes are more popular with guests. They also receive higher reservation rates than non-themed ones. After you select your home, you’re ready for the next step of your vacation rental checklist.
2. Conduct Market Research on Vacation Rentals in Your Area
What’s the next step on your vacation rental checklist? You’ll have to conduct market research on your competitors.
Before listing a property, learn everything you can to master the vacation rental business. First, ask about which permits you’ll need to run your business and which regulations you must follow. If necessary, seek the expertise of a real estate attorney who can streamline the legal process.
After submitting your paperwork, begin competitive research to identify what other rental properties do well and what they get wrong. There are plenty of resources online that can help you find out about the current marketplace.
Visit vacation listing sites and learn how much other rental properties charge in your area. (Read more about this process in an upcoming section). Next, identify the most popular, well-reviewed rental listings. Keep a notebook handy and take notes about each property.
Think like a hotelier when conducting your research. When reading these listings, ask yourself, “Why do travelers like this property?” You can jot down the amenities, luxuries, and prices that they offer to their client. Read the customer reviews to see what they love best. You may carefully look at the pictures and find out what decor each property uses and how to incorporate a similar palate for your property.
Search for the worst-reviewed properties and find commonalities between these listings. Study the customer reviews to learn what travelers dislike about these rentals.
Once you’ve finished this step on your vacation rental checklist, use this information to develop your vacation rental property and build your business. When writing your listing, make sure it’s well-written and optimized. Use keywords in your listing to make sure that potential customers find your property. Also, note any nearby restaurants, attractions, and public transportation routes to make your listing even more attractive.
3. Prepare Your Property for Vacation Guests
The third step on your vacation rental checklist is to prepare your property for your guests. When visiting another city, most vacationers enjoy staying at attractive properties that help them feel safe, relaxed, and at peace. Your rental property should have an inviting atmosphere that will make your guests feel welcome.
To accomplish this goal, you’ll need to invest money to redesign your interior rooms. It’s essential not to cut corners on this step. Spending money to get your property in shape will pay dividends.
Your guests will be happier and leave better reviews about your listing. It will encourage other people to book your property and lead to increased revenues. You can visit design sites to get ideas for your home’s décor. Are you uncomfortable redesigning your space? You can hire an interior designer to stage your home for guests.
When staging your rental property’s interior, make sure it has a neutral decor that will appeal to different people’s tastes. Bed and breakfasts use this decorative approach to ensure that people will feel comfortable in their accommodations.
Staging and storage
Are you using your home as a rental property? Remove all of your precious, personal mementos, photographs, and clothing from your interior rooms. You want your guests to feel comfortable as if you prepared your rental for their vacation. This step is also critical because it will protect your priceless, irreplaceable items from neglectful guests who may damage (or steal) them.
Next, remove all bulky furniture that makes your interior feel small. Replace all dated and damaged furniture with new, high-quality pieces that make your listing look modern and spacious. For instance, your old couch may be perfect for your family’s movie night, but it may look worn out to others. Your new furniture should have neutral, appealing colors and avoid busier prints.
You don’t have to throw your old furniture away unless you want to make permanent decluttering part of your vacation rental checklist. You can move your couch into a self-storage option, like those listed on Neighbor. Box up your mementos and favorite pieces and place them into a long-term climate-controlled storage facility.
Another thing that many rental property owners forget is to upgrade their appliances for guests. Make sure that you have upgraded your kitchen appliances and fixtures. Additionally, purchase new mattresses, box springs, and other amenities for your guests.
When preparing your rental property, don’t forget to maintain other critical areas to make it more desirable. These include basic things like landscaping your yard, checking your HVAC system, and eliminating pests.
Now that you’ve finished this task on your vacation rental checklist, you’re ready for the next step.
4. Add Luxurious Touches to Your Rental Property
The next step on your house checklist is to add luxurious touches to your rental property. It will appeal to travelers and your other guests.
Some owners spend thousands of dollars to purchase a rental property and prepare it for guests, only to balk at spending extra money on amenities that guests would enjoy. They don’t want to spend extra money to purchase quality linens. Instead, they opt for cheaper towels, blankets, and soaps to cut costs and save money.
But Architectural Digest suggests upgrading your rental property with minor changes. For instance, swap out knobs on your existing cabinets and drawers with new ones. Store the old ones in a safe place. If you have a dated kitchen floor, you can use vinyl stickers in simple, solid colors to makeover the room.
You can switch out the showerhead in the bathroom for one with a gorgeous design or even massage options. Other touches you can add are plants like ferns, English Ivy, or aloes. Place your greenery into a chic planner that will wow your guests.
Don’t forget to place luxuries like shampoos, soaps, and aromatherapy options in your bathroom. You can also place well-stocked refrigerators and wine cabinets inside rooms for your guests.
If you worry about visitors stealing items, like linens, then leave a sign advising them you will charge them for missing items that disappear from the room.
You can use a self-storage platform like Neighbor to store your products when you’re not listing your rental property. Remember to store all items in sealed boxes or containers. Do not store food or perishable items in your storage unit.
5. Take Professional Shots of Your Rental Home
The fifth step of your house checklist is to take beautiful pictures of your rental home. Your listing’s pictures tell a story about your rental property. It shows potential customers whether your home is clean. These photos also help travelers assess whether your rental is desirable enough to book a reservation. First impressions matter in the vacation rental business. Photos are the single most effective selling tools to get customers.
Clear, beautiful pictures accentuate your property’s best features and entice guests to stay on your property. Travelers will be reluctant to book if you include grainy, low-quality, pixelated photos.
Don’t cut corners on this step in your vacation rental checklist. It’s usually a bad idea to try to save money by taking your own pictures. For example, cell phones won’t always produce the highest quality pics. Additionally, these images may not capture the best features of your vacation rental property. Amateur photographs are inexpensive, but they cost you revenues when you lose bookings to your competitors. Do yourself a favor and invest in professional photography services.
A professional photographer has the expertise to snap the most flattering angles and use the best lighting to make your vacation rental look irresistible. Are you short on funds? Some vacation rental management companies include professional photography services in their packages when you sign up for their sites.
Before hiring your photographer, ask to see their portfolio. During an initial consultation, talk with them for half an hour. Your first impressions can tell you whether this person would be a good fit for you. Additionally, speak with their former clients to find out if they liked the person’s work.
Pro tip in your vacation home checklist:
Get two sets of pictures that show your property during the winter and summer. Make sure that your commercial photographer gets clear shots from every angle of your property, including the kitchen, dining rooms, bathroom, and sinks.Also, ask the photographer to film a guided video tour of your property for prospective guests.
Once you get your professional shots, you’re ready for the next step on your house checklist.
6. Price Your Vacation Rental for Year-Round Success
Some vacation rental owners charge the same daily rates year-round for guests. It causes their listing to struggle when the peak season ends and their competition fades. So they lose out to cheaper rentals in the same area.
Others charge the lowest prices when occupancy increases but ultimately charge too little. It causes them to miss out on some revenues they could use. You can look for vacation rental management programs that help you to develop a dynamic pricing strategy for your business.
Are you not sure whether your pricing strategy is successful? If so, then you can use apps like AirDNA to see how your property has performed against other marketplace competitors. Revisit this step in the vacation rental checklist every year to keep your pricing competitive.
7. Pay Taxes on Your Vacation Rental Property
When running your rental property business, make sure you take care of all appropriate taxes on your property. In California, vacation properties must collect a transient occupancy tax (TOT). It is similar to lodging taxes across the United States whenever you rent a room, bed, or space. The operator must collect the tax and pay it to the federal government.
When filing taxes, you can handle this process yourself, but it is not recommended. You can use software accounting suites specifically for rental properties, like MyLodgeTax. A better choice is to hire an accountant or an assessor to handle these taxes for you. Paying a competent professional can help you avoid trouble with the federal government in the future.
If you need more information about taxes related to your vacation rental property, then read Intuit Turbotax’s 10 Tax tips for Airbnb, HomeAway, and VRBO Vacation Rentals so you accurately manage this step in your vacation rental checklist.
8. Buy Enough Insurance to Protect Yourself and Your Guests
The next step on your vacation rental checklist is to buy insurance. When starting your vacation rental business, you’ll need enough insurance coverage to protect yourself and your guests if the worst happens. There are policies specifically designed to cover rental properties. Most vacation rental owners have either a homeowners or landlord insurance policy for their properties.
Unfortunately, these two policies have significant gaps in coverage.
- Homeowner’s insurance only covers properties occupied by the owner. Landlord’s policies handle properties rented by tenants.
- Vacation properties have three uses: rental stays, owner stays, and unoccupied stays.
Comprehensive home insurance and rental insurance policies can help cover incidents that take place when a traveler rents your property. These policies protect your guests and your assets if someone has an accident on site.
Another choice is to get a rider on a personal umbrella policy for only a few hundred dollars more per year. Some rental management sites, like Evolve, will offer additional insurance coverage when you sign up for their services as an added benefit.
9. Create Rental Agreements for Your Guests
After you purchase insurance, the next step on your vacation rental checklist is to draw up rental agreements for your guests.
You should ensure that you have a clear list of expectations between you and your guests. These policies will ensure that all parties understand what they can and cannot do on the property. It also outlines the house rules, the payment of rental fees, and check-in/check-out policies. You can also include what restitution vacationers must make if they damage your property.
In the house rules, you can tell guests whether smoking is allowed on the property. Additionally, outline your policies on pets, parties, and occupancy.
To protect yourself, it’s a great idea to contact a real estate attorney for advice.
10. Reach Out to Your Guests And Ask for Reviews
The final step on your vacation rental checklist is to ask for reviews from your guests. After your guests leave, ask them to provide an honest review of their visit. Positive testimonies can boost reservations on your property because people trust first-hand accounts from unbiased reviewers.
You can leave this request in your property’s guide book. Additionally, you can email the request or use a handwritten note.
Do you need to store away your old furniture or rental supplies in the off-season? Using a self-storage facility, like Neighbor, can help protect your items until you use them again.
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