I’m sitting here in my backyard looking at the dog and wonder what is a vacation rental home. I did some research and looked around to see what everyone else is saying. Depending on the country people have different meanings but almost all have a similar definition.
A vacation rental home is a property you rent out to one or more guests for a short period of time. Usually, guests will rent them when on vacation or when traveling for business. A vacation rental home can be a single house with a yard or even a small city apartment. Depending on local law it can be rented out all year round or just for a certain period.
People talk so much about this and there is so much information out there. I’m going to run you through some of the stuff I found. That way, you don’t have to waste your time looking for stuff I already googled.
What defines a vacation rental home?
A perfect vacation rental home is hard to define. On top of that, our experiences are different and our wishes and demands very subjective.
Some say a vacation rental should feel like home. Others and I tend to agree, say it shouldn’t. In the end, one of the reasons you are leaving home on vacation is to see and experience new things and that includes the place you stay at.
I took the time to read review online from 100 vacation rental properties from the top 5 visited cities. From those reviews people seem to want:
- A good vacation rental home should have a nice, clean bathroom. ‘
- A big shower and fresh towels.
- A big bed is a must.
- And the bed should come with the most comfortable mattress ever.
- Plus big pillows.
- A good coffee machine, and big mugs which are easy to hold.
- The property should have easy access and preferably a parking space on the premises.
- Big TVs and other entertainment systems don’t appear as often in requests but they’re there.
- The view is not that important for most guests but big windows for natural light are.
In the end, you have to realize you can’t please everyone. Make your vacation rental home a place you would like to stay at and listen to your guests. Following their feedback will take you a long way. And it’s one of the easy ways to move from one vacation rental home to a vacation rental business.
Should I start a vacation rental home business?
Vacation rental businesses make all the sense in the world. First of all, they can be a great source of income.
A vacation rental business can diversify your asset portfolio and bring in real estate income. But different than classical real estate, vacation rentals, if managed correctly can bring double or triple the amounts on the same type of property.
Like any other business, vacation rentals come with their own set of challenges. Even if you have fewer employees some chores might be tricky to manage. For example, you have to synchronize 2 cleaning staff between 4 apartments on the same day so all check-ins happened as expected.
But on the plus side, compared with other businesses vacation rentals are not hard to manage. Also, depending on the type of person you are, you might find joy in meeting and socializing with new people.
What to expect when you start a vacation rental business?
You should set aside a few weeks, in the beginning, to get your property ready. Renovating and decorating shouldn’t be a challenge as long as you keep your guests in mind.
In the meantime, think about and start working on your website and other marketing material you’ll provide to your guests.
Get a professional photographer to take some pictures and choose the best ones.
List your property on vacation rental websites and start getting your first guests.
These are just a few steps that should be in your initial business plan. Some might seem natural others require a bit more research. Having the right property helps. Being in a tourist area helps even more.
If you decide a vacation rental business is for you, take your time, do your research, and jump in. From my experience, the benefits outweigh the hassle.
Should I use a vacation rental agency?
At one point we all have to decide if we want to continue to manage our property or sign a contract with a vacation rental agency.
Having our vacation rental homes professionally managed comes with a cost. This cost is offset mostly by the time we gain. No more cleaning, check-ins, price management, back and forth messaging, or any of the other hassle.
The vacation rental agency comes with its own staff and expertise. Plus, if it’s big enough with its own stream of guests. They usually have their own website. And on top of everything else, they bring their own procedures.
These procedures are the main difference between vacation rental homes managed by owners and the ones professionally managed.
In the long run, choosing an agency can become a big plus as you will turn active income into passive income. So even if you see an initial drop in income usually, going with a vacation rental agency turns out to be a big plus.
What are vacation rental home websites?
Vacation rental home websites are listing websites where you can publish your property. They attract millions of guests from around the world every day. People like you and me, looking for a place to stay while traveling.
Websites like these usually charge a commission fee for every booking they generate. The commission may vary from 2% to 15% and in some cases even more.
They are the best place to get guests from as you are starting out with vacation rentals. After you managed to build your own marketing channels you will use them less and less. Over time you can still decide to list with them for low seasons or for last-minute deals.
The advantages of using vacation rental websites:
- You go through an approval process so people booking your place can trust you’re not a scam.
- The same thing applies the other way around. People staying with you have reviews from other hosts so you know what you’re getting yourself into.
- You get access to hundreds of millions of travelers in an instant
- Most websites, give you tools to better understand the competition so you know how to price.
- You can quickly fill up the empty days in your calendar.
The disadvantages of using vacation rental sites:
- You pay commission on every booking and in some cases, it can get pretty steep.
- Your business depends on an external partner for reservations, and this might become a weakness in the long run
- You rarely get repeat visits – which can build up to become a big revenue stream.
- Some of these sites have support teams that are not so responsive. So any issues you might have it could be a while until you reach someone.
The general consensus online seems to be vacation rental websites are good for starting up your business, but they become a risk once you grow relying only on them.
Which are some of the best vacation rental home sites?
1. Airbnb – The one that started it
Airbnb is one of the first websites that started listing vacation rental homes a while back.
They actually started the vacation rental movement by teaching people how to rent out spare rooms in their houses for travelers.
Today Airbnb become a huge online destination for millions of people looking for accommodation.
A cool thing I like about them is how many types of properties they handle. You can go on Airbnb and find a nice beach house, or an apartment in a crowded neighborhood, or even a tree house in the middle of nowhere.
2. Booking – Probably the biggest one
Booking is another listing website that brings in a lot of reservations. They started out with hotels and traditional holiday accommodations.
Later on, they moved into vacation rentals and took the market by storm.
Just to understand the size we’re talking about, they usually get more than 400 million monthly visitors on their websites. All people interested in travel and looking for a place to book.
3. Your own website – the small guy
If you do decide to buy a vacation rental home and start your own business your own websites should become one of the most important listing sites for you.
It’s something you should think bout from day one. All other listing websites will provide bookings faster but at a cost. The moment you stop listing you start losing business.
If you understand how to build your own vacation rental website correctly you will have a steady stream of bookings for years to come.
Renting your own home as a vacation rental
Renting your own home as a vacation rental is a good way to understand how everything works. Depending on the guests you get it can be a pleasant or a not so pleasant experience.
What I found out while researching vacation rental homes is that renting your own property or a spare room is a completely different experience than renting out a dedicated vacation home.
If you do decide to rent out your own home, people online say to do it through one of the existing and trusted listing websites.
Another approach owners take is to rent it out while they themselves are on vacation. There are reviews and testimonials of people saying that this technique almost paid for their entire vacation. But I guess that depends on where your home is located and where you’re traveling to.
Renting your own home as a vacation home sporadically throughout the year could bring in enough income to pay for local property tax or for the HOA fees.
Most of the current vacation rental business owners started out renting their own house so this seems to be a good technique to better understand the market.
It’s easy to start-up a vacation rental business. Buying your first vacation rental property and getting your first visitors could be done relatively quickly. And things should be more clear now that we found out together what a vacation rental home is.