3 ways to make managing a vacation rental feel like a holiday
Vacation rentals, increasingly referred to as private accommodations, have been around for decades. Historically, a family would buy a second home and then hire a property manager to rent it out during the time it wasn’t in use. With this tactic, the owners used vacation rental income to defray ongoing costs and generated profit based on the long-term appreciation of the asset.
With the rise of platforms such as Airbnb, HomeAway, and VRBO, the number of people using these rental options has skyrocketed. A 2017 report by Phocuswright notes that the number of U.S. travelers using or considering private accommodations rose to almost 50 percent in 2015 — up from just 35 percent the year prior. In fact, research from Booking.com indicates that 33 percent of travelers prefer this option over a hotel.
In other words, it’s a great time to be positioning yourself in the vacation rental market. For the skeptics who think that the bubble is about to burst, a 2019 report from Skift suggests that we can expect to see solid travel growth in the coming year. International travel increased by about five percent in 2018, and global economic growth is expected to increase in 2019 — indicating that travel won’t be slowing down anytime soon.
Overcoming the Obstacles
Market conditions aside, successfully managing a vacation property is not without its challenges. Many owners start out with the intention of taking advantage of the rental market on their own. Managing a single property is a viable approach, but it generally takes more time and effort than people think. Finding guests, collecting rent, paying taxes, and finding help to clean and maintain the property is only the beginning. When you start considering multiple properties, the responsibilities quickly add up and become more than one person can handle.
It’s important to remember that the demands of short-term rentals aren’t spread evenly throughout the week. You might have a high volume of check-ins and check-outs on Thursday, for instance, or multiple calls from tenants on a Saturday looking to get a problem addressed quickly. The seemingly simple process of dealing with bookings can even be demanding: Most prospects expect a response to their inquiry almost immediately, even if the rental period is months away. If you don’t respond fast enough, potential customers will take their business elsewhere.
If these challenges are making you think twice about earning income and building wealth with a vacation rental property, it doesn’t have to be this way. Follow these three tips to keep your eyes on the prize as you begin to realize the potential of vacation rentals:
Play the long game.
Keep an eye on the long-term investment horizon, and don’t expect immediate returns. Even when you budget for necessary updates to a home, you might find that revenue from the rental doesn’t cover 100 percent of upkeep and rental operations. Pace yourself — you’re tapping into the appreciation of the asset, and you’ll get to enjoy it with your family as you build wealth.
Try to avoid the short-term temptation of comparing the price of your own rental with others in the neighborhood. Just because a neighbor rents a house for $2,000 per week doesn’t mean you necessarily can.
Choose the right partner.
The right property manager will constantly be on the lookout for new ways to improve their (and your) business. They’ll identify best-in-class technology solutions to solve everyday problems and streamline operations, maximizing your return and protecting your assets.
Consider a professional vacation rental manager who is a member of an organization such as the Vacation Rental Management Association (VRMA). Professional managers will assist you in picking out the right house to buy, and they can also help you fill it with the right tenants at the right price.
Know your guests.
The Millennial generation is becoming one of the biggest groups of rental customers, but that doesn’t mean you should discount Baby Boomers or Gen Xers. Know your rental market and recognize the unique desires and expectations of each group.
While Millennials might want to know the best “selfie spots,” Gen Xers could care more about Wi-Fi (for their children’s movies/devices), and Baby Boomers may just want a little peace and quiet. Know who you’re trying to reach, and make sure your home is properly outfitted to be your target guests’ “home away from home.”
Vacation rentals can be a great way to help you build long-term wealth, and various rental platforms make unlocking that potential and finding renters easier than ever. Still, the ins and outs of managing these properties are often much more demanding than people expect. A single property might be manageable but juggling the demands of multiple properties quickly becomes a full-time job. To leave the headache behind, follow the above steps and unlock additional wealth without any unnecessary work.