Vacation Rental Startup Checklist: Tips for Short-term Rental Business
Start your vacation rental business right with our comprehensive startup checklist! Discover essential tips for success in the short-term rental industry.
Running a vacation rental business is more than listing a property on Airbnb. It requires planning, financial investment, and commitment. The vacation rental industry is expected to grow by $100.30 billion in 2024, contributing to an increase in hosts' revenue but also in a fiercely competitive market.
If set up correctly, a vacation rental property can generate passive income and create exciting opportunities to meet new people worldwide. Although it can take some time to flourish, hosts who stick to it can reap the benefits later.
Having a short-term rental also means being a small business owner. And just like business owners do, you need to make smart decisions to ensure the safety of your rentals and your guests' satisfaction. In this guide, we'll help you make your first steps as a rental owner and succeed in the competitive short-term rental market. Let's dive in!
Vacation Rental Checklist for Property Managers
1. Take Legal and Tax Advice
Before you get started, you need to get the legalities in order. Familiarize yourself with regulations and restrictions in your local county or city. Although some local governments may allow short-term rentals, others might impose strict rules or prohibit them entirely.
You may need a business license to host guests and create a separate account for your personal and business income. We highly recommend getting advice from a business attorney and a tax advisor to register your business and obtain the required certifications.
2. Secure Your Property With Insurance
No one likes to pay for vacation rental insurance, but you've got to prepare for a rainy day. Before you make your vacation rental properties available, gather the best insurance options in the market and carefully pick the right one for you. Pay special attention to the "exclusions" section to see what's covered and what's not.
For example, some insurance companies exclude weather or natural catastrophes unless you pay a premium fee. In that case, you should have some saved-up cash to cope with such emergencies. Although large OTAs like VRBO and Airbnb offer liability insurance of up to $1 million, you might need additional coverage for your short-term rental property.
3. Create a Business Plan
A vacation rental business plan is the roadmap to make strategic investment decisions. Here are some key factors to include:
- Estimated revenue. Take a look at vacation rentals in your area and keep notes of their night fees to calculate your own estimated income.
- Startup costs. The costs you should expect for your vacation rental supplies, down payment, furnishing, decorating, amenities, and business licensing.
- Operating expenses. All the costs to keep your vacation rental up and running, such as repairs, landscaping, marketing, or vacation rental software.
- Cleaning fees. If you decide to outsource cleaning to professionals, you'll also need to account for those expenses.
- Cash reserves. Your "rainy day" money to take care of unexpected issues.
- Taxes & insurance. Your taxes and any local short-term rental fees.
4. Prepare Your House to Accept Guests
Once you take the nitty-gritty out of the way, it's time to get your property ready to accept guests. Even if your vacation rental doesn't need extensive repairs and renovations, you'll still need to furnish and equip it with basic amenities and extras.
For example, you'll need cooking essentials, cleaning supplies, comfortable seating, and kitchen supplies. Guests nowadays are not that easily impressed and expect hosts to go the extra mile. So, if you really want to appeal to them with your vacation home, consider adding extras such as an outdoor grill, swimming pool, a home cinema, or a jacuzzi.
5. Set Dynamic Pricing
The prices you'll set for your vacation rental will significantly impact your occupancy rates. A set-it-and-forget-it approach won't work for vacation properties. Instead, you want to set dynamic pricing by considering real-time market conditions, seasonality, amenities, and your profit margin. (pricelabs)
Setting a price you would personally pay for a vacation rental home also won't work. That's because you might be willing to spend the extra cash for luxury amenities, but your guests won't. So be careful not to price yourself too high, as this will result in revenue loss and low demand.
6. List Your Properties Online
Get discovered by guests by listing your vacation rental online on large OTAs like Booking.com or save on hefty fees with a book-direct website. With Houfy, you can contact guests directly, completely control your booking calendar, and set your own rules and pricing.
To make your listing even more appealing, capture stunning photos with your phone, optimize your descriptions for SEO, and encourage positive reviews from guests. Make sure to create a community of loyal visitors who return for more stays, and always prioritize guests’ experience from start to finish.
7. Leverage Digital Marketing
A vacation rental business doesn't end with listing your property online. As a rental owner, you must market your properties via social media, paid advertising, and influencer marketing. Your goal should be to create an online community of raving fans who engage with your business and choose you for future bookings.
Infuse people with the travel bug and promote special offers and discounts to gain visibility. For example, share beautiful pictures of your home on a sunny spring morning with a coffee on your outdoor patio. Or promote a pet-friendly cocoon for guests and their little friends.
Another great tactic is investing in your organic search engine optimization (SEO). This will boost your website's ranking in Google and increase traffic and sales. Whatever marketing tactic you choose, always place guests at the center of your attention and ensure a great experience.
Your Turn to Create a Vacation Rental Business
Running a vacation rental business isn't easy. But with these strategies, you'll have a clear picture of where to start and where to pay attention to. If you're ready to take your business venture to the next level, Houfy is the perfect place to list your properties. Join a community of over 50,000 guests looking for book-direct solutions and take your business into your own hands.
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