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It’s no secret that we’re big fans of vacation rentals! However, that does not mean these properties are always easy to manage. You can face many challenges as a vacation rental owner. We’ll discuss what you can do to run a successful vacation rental business.
Vacation rental properties can be a passive income source for you and a free place to stay while visiting your favorite destinations. So, although there are challenges you’ll face as an owner of a vacation rental, they shouldn’t be a deterrent! Below, we’ll look at 8 things to know about owning a short term rental.
Local short term and vacation rental regulations
No one likes talking about bureaucratic red tape. Yet, it’s an unavoidable issue. At different times, the local government may have a high or low opinion of vacation rentals. This could change how you operate your vacation rental or even whether or not you’re legally allowed to own one.
There’s no easy fix for this issue. However, a few due diligence steps on your end could help.
- Keep an eye on the local news to see which direction the wind is blowing: set up a google search alert with specific terms so you’re made aware of new vacation rental regulations.
- Stay in touch with other rental owners in the area. These contacts can help you anticipate any looming changes to regulations.
- Check HighFlyRE’s short term rental regulations database where we have detailed ordinance information and local government contacts for vacation rentals.
By keeping abreast of any local updates, you’ll be able to stay on top of any changes that may affect your vacation rental.
A Little Too Much Friendly Vacation Rental Competition
If you own a vacation rental in a thriving tourist destination, chances are there are many other vacation rentals nearby. “The vacation rental or short-term market sees many more homes listed than travelers searching,” says Lodgify. With all this competition, you may feel that it is difficult to set your rental apart.
Luckily, there are plenty of ways to highlight the unique aspects of your rental. A lot of that begins with taking high-quality . These pictures grab vacationers’ attention and give them a thorough idea of what your property offers. You can also use resources like AirDNA and AllTheRooms to research your competitors and see what they’re lacking.
Surviving the Low Season for your vacation rental
While it can be stressful to manage your vacation rental during the high season, it can also be challenging to own your vacation rental in the low season. Lowering rates and watching your vacation rental sit unoccupied for days at a time during the low season is scary and frustrating.
Luckily, there are plenty of ways to avoid a severe low season for your short term rental. During the vacation rental acquisition phase, look for properties near destinations that attract visitors year-round. For example, if you’re acquiring a property in Minneapolis, chances are most travelers aren’t heading there in the winter. However, some tourists will still visit the Mall of America, especially around the holidays. Purchasing a vacation rental property near this destination will ensure it is attractive to many visitors, no matter the season.
Handling Damage to your vacation rental
If you’re hosting spring breakers or Mardi Gras partygoers, you most likely expect property damage at some point. But even if you have the best guests in the world, mistakes happen, and you’ll eventually have to charge a short term rental guest for something beyond natural wear and tear.
To begin with, make sure it’s very clear in your vacation rental agreement what dictates “property damage.” As much as you don’t want to be the vacation rental property owner with the book-length rental agreement, it’s important to define terms. Then, make sure to collect a security deposit from guests. Lodgify outlines a few different ways to decide how much to request, including a fixed price or a percentage of the per-night rate.
Wear and Tear on your vacation rental property
Over the long-term, wear and tear on your vacation rental home is inevitable. Eventually, the poolside chairs will look too sun-dyed, the sofa will grow tattered, and the walls will need a new coat of paint. Because these are issues caused by time, instead of damages from short term rental guests, it will be your responsibility to pay for necessary fixes.
The best way to avoid headaches caused by wear and tear is to set aside money each year for renovations. That way, when you realize furniture or appliances just aren’t cutting it, the fix is already built into your budget. Keep in mind that you’ll need to set aside more money if you have high-end amenities, such as a pool.
This will be a good factor to keep in mind during the vacation rental acquisition phase, too. Factor a “wear and tear” budget into your operating costs. Then, make sure you still come out in the green before investing in a vacation rental property.
Pressure From Quick Turnaround Times
Picture this: It’s July, and you own one of the best vacation rentals in Clearwater, Florida. Several times a week, you have guests leaving at 11 AM and the next group pulling in at 4 PM. Time to sit back and count all that money, right? Wrong, because someone has to make sure the vacation rental property is spotless and ready to go for the next guest.
Quick turnaround times can pose a lot of challenges as a vacation rental owner. You (or someone you hire) will have to vacuum, replace sheets and toiletries, and check for damages right after each guest leaves. At the same time, the next guest might be calling or texting you with questions, such as directions to the rental. You’ll need to give them prompt and clear responses.
So how do you put yourself in a better position to address this challenge? Consider hiring a property manager. These professionals handle much of the communication with your guests. Often, they also work with a vacation rental cleaning service that can deal with quick turnaround times. Delegating these day-to-day tasks to trained vacation rental professionals frees you up to focus on the bigger picture.
Calculating Short Term Rental Prices
Certain annual events will drive short term rental guests to your area in droves. Mardi Gras in New Orleans and spring break in Miami are just a few examples. This is a time when you want to maximize your earnings. The challenge here is that you don’t want to set your prices so high that guests feel cheated and leave you negative reviews. How do you set an assertive but fair per-night rate?
Tools like AirDNA and AllTheRooms help you see what vacation rentals nearby charge each night, including during the holidays. Plus, you can filter your search to only look at comparable properties. That way, you ensure your location, square footage, and amenities are similar to the competitors you’re basing your rate on.
Keeping Up With the Joneses
The local vacation rental competition will have a lot of say in what you’ll need to offer guests to stay relevant. For example, if you’re the only short term rental in town without a pool, you might be in trouble. The competition may force you to acquire a property with these high-end amenities, taking on all the maintenance costs and liability that go along with them.
This can be frustrating, especially if you have limited knowledge of these amenities. That’s why, during the acquisition phase, you should look for areas and properties that play to your strengths. For example, if you’re an avid skier, it makes sense to acquire a vacation rental property near a ski resort. You know better than anyone what a traveler needs after a day on the slopes. Finding and maintaining a vacation rental property with the right amenities will feel less like keeping up with the Joneses and more like crafting the ultimate short term rental guest experience.
So, while there are several challenges you’ll face as a vacation rental owner, they are not insurmountable! Once you’ve decided a vacation rental is right for you, explore some of the vacation rentals for sale here on HighFlyRE.