Smart real estate investors are learning they can earn more money on short-term rentals through services such as Airbnb, Turnkey, and VRBO than traditional rental properties. While there’s always been a market for vacation rental homes, an increasing number of investors are buying with the intent to operate full-time vacation rentals.
If you’re looking to start or grow your real estate investment portfolio, this is what you need to know about creating a lucrative short-term rental that stands out from the crowd.
What Makes a Great Vacation Rental
Like all real estate investments, an exceptional vacation rental starts with an exceptional location. The best location is one that attracts tourists year-round. If your property is only booked for half the year, your income potential is severely limited.
Vacation rentals should be bright, contemporary, and clean — but they shouldn’t be boring. Skip the beige microfiber and instead use bold colors and local flair in your property’s interior design. Avoid veering into kitschy territory by balancing statement pieces with modern neutrals. A funky sofa or accent wall makes a great focal point for a social media snap, but loud colors everywhere skips past stylish and into overwhelming.
Travelers are willing to pay more for vacation rentals than hotel rooms because they save money in other ways. Instead of dining out for every meal, guests can buy groceries and eat in. And instead of racing to get out of a cramped hotel room, families can connect over fun activities in a home-like setting.
But the best vacation rentals don’t stop there. The rentals that keep guests coming back season after season are the ones that make them feel like they’re at home — if their home got an upgrade. Think high-end bedsheets and towels, gourmet kitchens with top-shelf coffee and tea, and stylish outdoor living spaces with a place to soak. Once you’ve invested in amenities, be sure to include them in your marketing. Don’t just tell, but show vacation rental travelers the amenities they’ll enjoy by staging photographs to showcase all your property has to offer.
Don’t underestimate the impact of marketing. The occupancy rates of well-marketed properties outperform units that rely on vacation rental listing sites alone by 22 percent. Go beyond the basic listing to advertise your property on Facebook, Instagram, and your own website using professional photographs and well-written descriptions. If you don’t have enough time to market the property on your own, consider hiring a property management agency.
If you don’t live near your rental property, it’s difficult to ensure that it stays in great shape. And while you can bring in someone to keep an eye on things, it’s a good idea to hire a property management company to ensure your home is well-maintained and ready for guests. The right management agency will keep you informed of what’s going on with your rental — some of which provide up-to-date information via smartphone apps — and offer around-the-clock support for you and your guests. This is a smart investment all the way around.
Preparing to Buy Your Investment Property
Once you’re ready to buy, talk to an experienced real estate agent who knows the area. Your agent can point you toward the best neighborhoods for vacation rentals and help you calculate the income potential for your investment property. When you do your homework to purchase the right investment property, you set yourself up for a profitable future.