Are you ok with other people sleeping on your mattress?
This is something you will have to get used to. And it doesn’t stop at the mattress. You will have strangers in your house all the time. If you are renting out an extra bedroom this might be new to you. If you have a property you are renting out long-term think of the same experiences that you have with your tenants. That, but repeated every couple of days.
You sometimes meet nice people, funny people, guests that take care of your property as if it were their own. Other times you get people that don’t care. They break stuff, they take stuff and they leave a big mess behind.
Whatever the case you will have to live with it. They are your customers. Each of them. With good and bads, the customer is always right. Websites like Airbnb, for example, came up with solutions for this. You can give guests a review the same way they review you. You can look over the reviews of future guests and select the bad ones out.
Nonetheless, you will have good and bad experiences. There is nothing that can prepare you for either. So get ready.
How much time are you willing to invest?
I wouldn’t say vacation rental property management is a full-time job. But it does have the tendency to eat a lot of your time. In some cases, depending on the length of stay, you might end up putting more than 8 hours per week. For example, for one of my apartments, the average length of stay is 2 days. That means at least 3 or 4 guests per week. It means talking, arranging check-in/checkout cleaning and everything else.
It’s true some of this stuff can be automated. With the use of a good property management system, most of the hassle will go away. But you will still have phone calls in the middle of the night with guests that suddenly arrived later or earlier. On top of all these issues with the apartment may arise. Some stuff you might be able to handle (light bulbs for examples). For others, you might need a professional contractor.
You could get help: a cleaning lady or someone that can help with check-in and that relieves some of the stress. When you draw the line these people mean fewer hours from you. But they affect the bottom line by adding extra costs to the monthly expenses. Depending on labor costs and quality of help you can find in your area this might be something to consider.
I’ve seen vacation rental managers that choose to do self-check-in and checkouts. Though I have no problem with self-checkouts I do think that the checking should be a much more personal experience. Whatever the case you can’t consider vacation rentals passive income. There is work involved on your part and you just have to decide if you are willing to do it.
Are you ready to change your lifestyle?
Your life will change. In a big way. You are not only living in your city anymore, but you also become a “host”, you enter the hospitality business. With all that this means. You will have to learn to see the city you leave in through a tourist’s eyes. And that is a different perspective altogether.
Things you have walked by before for a tourist might be the peak of their journey. You always have to be in touch with attractions in your city, new festivals, exhibits opening up. You will have to be able to recommend the best of the best for your guests. All this is part of that “host” experience I was mentioning earlier.
There are side benefits for you to learn this too, so don’t worry. For example, knowing the dates of certain festivals can help you with pricing. Plus you will learn to fall in love again with the city you leave in. If I had to choose I would say for me that has been the biggest takeaway.
Are you able to offer a memorable experience?
As in any other business you need a differentiator. Something that makes you stand out. Something that in the end will make your guest’s trip memorable. It can be a small thank you note on the side of the bed, thanking them for choosing your property. Or it can be something bigger.
A vacation rental manager in my town loves to leave a bottle of local wine as a thank you. Another one brings a lot of kids toys for people traveling with their young ones. Another “host” loves to do a walking tour with his guests around the apartment and a bit through the city center. For him, this takes the check-in time from a few minutes to almost two hours. But the reviews he gets make up for the invested time.
Another way of doing this is by keeping in touch with your guests throughout their stay. Try to avoid a “leave them and forget them” approach. Instead, after the first night, you can message them and ask if everything was ok. Ask them if they need extra towels or directions to get somewhere.
All this comes back to you in the form of reviews. And they are part of your business. One of the more important ones. They will not be always 5-star reviews. Even when you do your best people will still complain and find things to pick on. The best part is that over time the bad ones get lost in the hundreds of amazing ones. And in the end, that’s the best marketing your business can have.
Will all this effort be profitable?
It depends on your business plan would be the short answer. Vacation rentals are profitable. That’s one of the main reasons people start doing it. Probably the main reason you are reading this article. But everything you do affects the bottom line. The portals you choose to publish your property if you have your own website if you promote your property somewhere else are some examples.
The very basic calculation you could do is look at long-term rent in your area and multiply that by 3,5. On average that is the income you will get from a vacation rental. Some areas might work better than others and some properties might be worth spending more on.
What I can tell you is that leaving money aside, the experience alone makes it worthwhile. And in case you don’t want to manage it yourself get a property management company. A good one will still make it more profitable than long-term renting.
Is there a risk you are breaking the law?Depending on the country and city you plan to do this in certain laws may apply. You should check with a lawyer beforehand to see exactly what papers you would need to file or if there are any permits you need to get.For example, in Paris, vacation rentals are limited to only 120 days. In Barcelona, you need a special permit that the town hall stopped issuing. This last one led to an increase in prices for apartments that already have these permits.Of course, there are people out there doing this illegally or in a very grey area of the law and still making money. I would not encourage that. If you are serious about doing vacation rentals and building a business around this, read up and respect your city regulations.
Is your property ready to host tourists?
I wanted to touch on this subject a bit before ending the article. There is a lot to talk about this and I will do more in-depth articles. For now, look at it like this. There are two aspects to consider when getting your property ready: practical and emotional.
The practical aspects of getting your property ready are the basic stuff guests need. These include a good mattress and a clean hot shower. Depending on the location it’s also the need for a parking spot, easy access to the ski slopes or to the beach, a swimming pool, etc. You can usually look at other apartments in your area and try to align yourself with the competition.
The emotional side is a bit more tricking. You are looking here for things that will make your property stand out. It can be a huge library, a fireplace, or a very intimate garden in the heart of the city. You should emphasize these with great looking pictures on all your listings and in the descriptions. Also in these categories, you have the feel at home stuff. Instead of normal Ikea mugs, you could have personalized mugs. Leave some umbrellas by the door so they can use them. Have a vinyl or movie collection.
One last thing for now when it comes to your property is that it needs constant upgrading. Add new stuff, improve the existing things, and always have the customer in mind.
In conclusion, be truthful with yourself about these 7 things. Are you ready to start a vacation rental business? Is your property ready? And if so are you willing to learn what it takes to be successful? If so, welcome to the club. It’s a great experience and you are going to love it.