This year, local markets across the country are beginning to heat up for second homeownership, according to Forbes, leading some people to consider the idea of jumping into the vacation rental industry with the help of popular short-term rental sites like Airbnb, VRBO, HomeAway and many others.
If you count yourself among this group, you’ll need to know a few things before you even get started, such as demand for rentals, estimated rental prices, how best to manage a property, on the ground services and local tax requirements for the area. Then you’ll want to consider how you’d like to position your property to prospective renters, as you’re going to find having a quality short-term rental and good customer service can help keep your rental property occupied.
From hiring property managers to implementing automated systems, ensuring you run a smooth operation increases the odds of travelers sticking shiny five-star reviews on your listings. Your attention to detail and professionalism can be the difference between flipping the virtual vacancy light on or off. Here are some actionable tips for entering the market and launching a successful short-term rental business this year:
1. Be your own property manager.
The first, and one of the biggest, decisions is if you want to manage the property yourself or hire a professional property manager. If you choose to manage your own unit, you’ll be able to avoid management fees — and keep a close eye on the process, ensure a positive customer experience and control your rental calendar. You will also pick up a ton of valuable experience along the way. Managing your own property allows you to oversee the process, reduce fees, provide a personal touch and directly impact keeping your rental booked throughout the year. But managing your own properties requires you to do all the work, such as creating your online listing, booking guests, checking guests in, dealing with guest issues, collecting money, scheduling cleaning and maintenance and managing occupancy taxes.
Who knows, maybe you’ll realize you’ve found your calling by managing your property and look to expand to manage additional properties to your own. In 2019, there is a strong demand, particularly in popular rental areas, for property managers who can keep rentals booked, guests happy and finances in order.
2. Or hire a management company.
For some people, self management, or rent-by-owner, isn't the best option. You may be short on time, unsure how to go about managing a short-term rental business, or prefer not to deal with the work involved. Hiring a professional management company can help calm the nerves of an owner dealing with their first round of bookings and remove the burden of dealing with guests, maintenance and cleaning vendors.
While you may lose some control over your property and there are (sometimes significant) management fees, hiring a property manager means you will be relieved from dealing with all the details of guests, managing booking sites, cleaning services, taxes and more. Hiring a manager can be a good first step for people new to the short-term rental game, and you can always consider taking it on yourself once you learn a bit more about the process. If you choose to hire a property manager, be sure they have experience in your market, they are professional and you are comfortable with them as a person. A good manager should quickly be able to give you a realistic assessment of nightly rates and expected bookings for the year.
3. Look to the fine details.
With numerous websites and listings galore at their disposal, today’s travelers have more options than ever. Hosts need to have a quality website listing that focuses on the strengths of the property, with lots of details about location and amenities as well as high-quality professional photos. And a few extras can go a long way. You can earn business if you include the expected amenities: a fully stocked kitchen, high-quality towels and linens and the all-important WiFi.
To cherry out your place and have guests eager to return, include popular tech comforts such as 4k TVs, gaming systems, Netflix subscriptions and a full cable lineup to pick up all the sports networks. Attentive owners provide items like beach chairs, beach toys, inflatable toys, beach towels, boogie boards and more.
Think about what you like and need when you are there and provide that for your guests. It’s important to remember people love a personal experience when going the short-term rental route. After all, they’ve chosen this experience over a hotel. Welcome notes or baskets with goodies like fresh roasts, wine or a simple cookie tray that conveys “thank you” for their choice. These cozy touches make your visitors’ stay a memorable one, upping your odds of a fantastic online review as you’ve set yourself apart in the short-term rental space.
4. Follow tax and licensing rules.
Short-term rentals are usually required to register and collect occupancy taxes, just like a hotel. Rules and taxes around short-term rentals are becoming increasingly scrutinized in communities across the country. As you get bookings for your new short-term rental, you’ll be required to register, collect and remit sales and lodging taxes. To get started, you’ll first need to register with city, county or state agencies (and sometimes all three).
The guest pays the rental tax but it’s your responsibility to collect and pay it to the correct city, county or state agencies, usually each month or quarter. Similar to a hotel, you’ll need to pay tax to one (or more than one) local governing agency. Any uncollected taxes or late tax payments may incur penalties and interest to the homeowner. Want to ensure you’re compliant? Set up an easy lodging tax platform to remove the burden and ensure nothing slips through the cracks. If you use a full-service property manager, it usually will handle these taxes as part of its services.
5. Automate your rental tasks.
Technology is making everything easier in the short-term rental space and, you’ll want to keep up with customers’ expectations for a smooth experience. Short-term rentals often have high turnover with lots of visitors. By streamlining your bookings, automation delivers maximum efficiency while providing a positive experience for any travelers. Today’s technologies allow you to streamline everything — the online booking process, guest reviews, contracts, the check-in process, keyless-entry systems, housekeeping communication, maintenance, temperature controls, payment processing and occupancy tax remittance.
6. Positive guest reviews are important.
Want a smooth and successful rental operation? High guest satisfaction is essential. Since most short-term rental bookings are processed online, visible five-star reviews are important for establishing credibility with any travelers who peek at your listing. As more owners get into the short-term rental industry each year, the space has become increasingly competitive for bookings.
And once you book your guests, there’s still the customer experience to consider. It’s common for guests to ask all kinds of questions — basic questions: Where’s the blender? Where can I park? How do I get to the pool? How do I turn on the TV or gaming system? Where are good restaurants? Where can I rent skis, boats and gear? You get the idea; you’re in the guest service business and if you are prompt and professional, guests are super appreciative, increasing the odds of a good review.
And sometime you have the sticky issue of a guest cancellation. If a guest cancels because of an emergency situation, you will have to make your own decision about how you want to handle that situation and what is fair to everyone involved, including you. Cancellations are rare, but in the past I have been pretty liberal about returning the deposit at my vacation rental. This can be an opportunity for the guest to visit again, plus get some appreciative and positive feedback. And the best way to get a glowing review?: Click here.
7. Understand your local rules and regulations.
Across the country, local municipalities are enacting new regulations aimed at short-term rental property owners. Recent elections brought new regulations passed from Maui to Maine, but this is an ongoing issue for short term rentals. This is important to note, because any new legislation in your area can impact your ability to own and operate a short-term rental. Even if you are allowed to short-term rent per city rules, you will still need to check with your HOA to ensure they allow short-term rentals. Maintaining awareness of the rules and regulations governing your new short-term rental can keep your business operating in the profitable zone, and keep you out of trouble.
8. Paint a complete online portrait.
Your visual representation online can make or break your ability to rent your unit quickly. If people are left with questions in mind, it’s possible they’ll move along to the next profile if it offers a more complete picture. From pools to tennis courts, highlight each and every amenity you can think of. You’ll want to fill out all the basics, such as: the number of rooms, bathrooms, beds and their sizes.
Describe the location with surrounding places to grab a bite, along with any unique characteristics, like a hammock under a lemon tree. The most important consideration is to provide high-quality photos — the latest trend is videos and 360-degree property tours.
I suggest hiring a professional photographer or videographer. You’ll see a much higher return on investment with bookings by boosting your visuals. With a complete listing represented on the vacation rental platforms where you list your property, you’re giving yourself the best opportunity possible for people to click the “book” button.
Rob Stephens is co-founder and general manager of Avalara MyLodgeTax, which providers tax compliance solutions for the vacation rental industry.