Making Money from Vacation Rental Properties

Making Money from Vacation Rental Properties

Many individuals are looking for prospective side hustles and asking how to earn money on vacation rental property in the wake of the worldwide epidemic. Although owning a second house does not ensure early retirement, it may be a sensible investment that provides a constant source of passive income.

According to John Banczak, executive chairman of TurnKey Vacation Rentals, you should strive for a $10,000 yearly rental income for every $100,000 you invest in a vacation home. On the other hand, according to statistics gathered by Airbnb and Vrbo, vacation rental owners may earn anywhere from $11,000 to $33,000 each year.

To assist short-term rental hosts and property managers in making the most of their real estate portfolios, we’ve prepared this practical advice on how to earn money on vacation rental property.

Starting a Vacation Rental Company

If you’re wondering how to establish a vacation rental company, we suggest thoroughly researching the sector first. We’ve outlined the most critical items to consider, from purchasing a vacation property to receiving your first guests.

1. Invest in a suitable vacation rental property.

If you want to invest in a vacation rental property to rent out as a vacation house rather than a real estate investment, you’ll need to do additional market research. When buying real estate as an investment property, start by evaluating the following factors:

• Location

The location of a vacation rental property has a significant impact on its profitability. Your rental property’s proximity to famous attractions, such as the beach or an amusement park, might lead to higher rents for your home.

Ideally, the area you choose should generate profits all year. However, you should remember that, although oceanfront real estate may create more revenue, it will also be more costly than, say, a suburban family house. Furthermore, investing in houses in a more desirable area may need a larger down payment, which means you’ll have to spend more for your investment property upfront.

• Taxes and restrictions in your area

Check local restrictions and HOA ordinances while looking for a solid real estate investment opportunity. Local rules and fees might limit a property’s earning potential. Some localities have extremely severe regulations regarding short-term rentals, while others outright forbid them. Look for further prerequisites, such as permissions.

• Occupancy rate potential

You might contact a local real estate agent or vacation rental management business to understand the prospective occupancy rate better. You may also just look at the calendars on booking sites to better understand availability in a given location.

• Seasonality

The peak season for vacation rentals, according to Vrbo, is just 12 weeks on average. Ideally, you’ll want to invest in vacation real estate that you can rent out during off-peak times as well. As a result, it’s advisable to look for an appealing place 365 days a year.

• The size of the property

If your house has additional bedrooms and bathrooms, you may usually charge more each night. But an accurate measurement is impossible. The property you seek must be manageable and cater to your needs.

Fortunately, several resources are available to assist new hosts who are just getting started. Keep this all-in-one beginner’s handbook close at hand for getting a jump start on your vacation rental.

2. Furnish and decorate your rental

While you can’t control things like the size of the house or local rules, you do have total control over the interior design. You can provide a better visitor experience by making an effort to develop attractive interiors. You may make your home stand out in the vacation rental market by going the additional mile and putting more work into its appearance. It also makes listing your rental on listing sites a lot simpler.

• Employ the services of a professional designer.

Everyone’s vacation should allow them to unwind accommodations. A typical error is to construct a residence only for personal enjoyment. As a result, it’s preferable to get an unbiased assessment. A professional designer will not only be able to provide you with impartial advice, but he or she will also be far more experienced and adept in decorating rental houses.

• Purchase furniture that is both useful and long-lasting.

It is preferable to start with traditional lines and color choices. By choosing more neutral options, you can guarantee that your house will appeal to a wide range of preferences and that you will not have to remodel or replace it as often. If you’re purchasing used furniture, be sure it doesn’t have any evidence of wear and tear.

• Make sure you don’t forget anything by using a checklist.

To consistently deliver a five-star visitor experience, your resort must supply a wide variety of supplies. Vacationers may get irritated if an amenity is missing from your property, and they may voice their dissatisfaction in their evaluations.

Keeping a checklist can give you peace of mind that you’ve remembered to bring all the essentials, such as extra blankets and towels. They may also ensure that everything is in functioning condition this way. For example, you may use inventory checklists for the kitchen, bedrooms, and bathrooms that you and your cleaning team share.

• Incorporate a regional flair into your home design

There’s a reason why your visitors choose a certain vacation spot. While it’s important to stick to lines and color schemes that will appeal to most people, you may still add subtle touches that evoke the mood of the place. In the case of beach property, you may include a nautical theme. As a result, your house may start to blend in with the rest of its surroundings.

Do you need some motivation? To be sure you’re on the correct track, try these home design ideas.

3. Provide helpful features in your vacation rental.

The comfort of your visitors’ stay is determined by the facilities you provide in your vacation rentals. The best approach to creating the ideal home away from home for your visitors is to have a mix of fundamentals and a few extras.

• Provide the essentials

It’s preferable to start with the essentials and consider what extras you’d want to incorporate. When it comes to basic facilities, your major objective is to ensure that your visitors have all the conveniences they enjoy at home.

When filling your vacation home, it’s a good idea to use a dependable hosting checklist to ensure you don’t overlook anything crucial.

• Add extras to wow your visitors.

Going the additional mile and providing something above the necessities is always a smart idea. You may take your rental to the next level by adding a few comforts to your house. Hot tubs and free Wi-Fi are popular supplementary features.

4. Make your vacation property available on the most popular vacation rental websites.

You must be honest about the condition of your property. One of the most significant tools to help you earn money with vacation rentals is a well-written, detailed description of your vacation rental home.

• Take a lot of photos of your rental.

Your images will be the deciding element in whether or not your business succeeds. It’s also a good idea to delegate this task to the professionals since it’s so important. You can even try commissioning a virtual 3D tour of your property.

•Use an attention-grabbing title to draw in readers.

When they are looking for a place to stay, they will see your title. Because there are so many short-term rentals on rental sites like Vrbo, Airbnb, and Booking.com, you’ll need to find something unique and memorable to stand out. Using generic language and promising more than your property can provide are two of the most prevalent blunders to avoid.

• Write a detailed description.

These qualities and capabilities are difficult to convey in writing, but your description helps. You must include relevant keywords in your description to appeal to both the search engines and your intended audience.

• List your property on many OTAs.

If you are in charge of promoting your home, you must choose the right platform. There are advantages and disadvantages to each platform. This necessitates posting your company on many websites. A bigger audience may be reached by listing on many websites.

More information on how to improve your listing may be found in our thorough guide.

5. Get vacation rental insurance that covers everything.

Money and hard effort are required to profit from a vacation rental property. So you don’t want a single event to damage the years of hard work you’ve put into your investment. Vacation rental insurance may provide coverage for your home, its belongings, and your business as a whole.

• What is covered by vacation rental insurance?

The suitable insurance plan covers liability, property contents, rental revenue, and supplemental coverage. You need this if you reside in a region susceptible to natural calamities.

• How much does it set you back?

Vacation rental insurance in the United States may cost anywhere from $2,000 to $3,000 per year. The cost will usually be cheaper if you utilize the home for your purposes rather than vacation rentals. The way the house will be utilized is a consideration.

6. Automate time-consuming chores

Choosing to automate time-consuming hosting duties allows you to concentrate entirely on growing your vacation rental company. It’s no surprise that property owners typically experience an increase in earnings after using vacation rental software.

Property owners get a quicker return on investment while simultaneously reducing their effort and expenditures. Vacation rental software is a cost-effective option to engage an outside team of property managers to assist with managing your rentals.

Many of your normal duties may be automated with Lodgable, allowing you to put your vacation rental management on autopilot. Its comprehensive variety of features makes it simple to do all of your duties more effectively and comfortably. 

  • Sync reservations across multiple platforms to eliminate the risk of double-booking 
  • Make sure your Stripe account is linked to Lodgable so that you can accept payments and produce invoices 
  • Take advantage of smart price modifications with AirDNA connections.

7. Allow for self-check-in.

Offering self-check-in eliminates the need for you or a member of your staff to greet your customers in person. To avoid having to organize your day around the arrival of your guests, this might save you a lot of time.

Guests are often exhausted after a long journey and are unwilling to engage in conversation. They may unpack at their leisure with self-check-in. Guests often like this since it allows them to select when they want to come after your official check-in time.

8. Make a welcome book and write a letter of welcome.

A welcome book will make your visitors feel at ease and enhance their experience. It’s an excellent platform for disseminating critical information and local highlights. Your visitors will regard you as a kind and attentive host if you also take the time to prepare a welcome letter.

9. Request feedback

Positive reviews can increase your rental’s exposure on listing platforms and help you acquire more reservations. Guests are more inclined to reserve a hotel with a high number of good ratings.

You should insist on a review since they are so important. Even a bad review may be beneficial since it can provide useful information about which elements need improvement. This kind request may be included in a departing message sent to your visitors to remind them of the checkout process, enquire about their stay, or just thank them for their patronage.

10. Be strategic in your pricing.

You can increase your occupancy rate and, consequently, your ROI by establishing the proper cost. However, this is the aspect that many homeowners find the most difficult.

You want to make sure that your rental revenue covers your costs and that you have enough money to grow your company. Market data, seasonality, and related qualities are all important considerations. Make careful to include management costs when determining your monthly rental prices.

• Estimate your costs.

Make a list of all the costs associated with operating your vacation rental company. This will help you keep track of the minimum nightly rental amount you’ll need to meet your costs.

Service fees, insurance fees, cleaning fees, expenditures to repair or maintain the property, vacation rental management fees, supplies replenishing, taxes, and the costs of promoting the vacation home are the key expenses to keep track of and include in your calculations.

• Look into the pricing of your competition.

When investigating your competitors, keep in mind that you should compare your property to others that provide comparable services. Just because you’re at the same place doesn’t imply you’re providing the same service. You could wish to make your vacation rental a bit less expensive than your competition. Your property will be leased out more often as a result of this.

• Make dynamic pricing a part of your revenue management plan.

Dynamic pricing tools take the uncertainty and worry of determining your vacation rental property’s rental prices. To establish the optimal nightly costs for your rental property, they can follow and evaluate market trends, demand and supply, seasonality, and a range of other significant variables.

All hosts that want to maximize their income should consider dynamic pricing. It keeps your nightly prices competitive while providing you with complete control over the management of your rental property.

• Make unique deals and concessions.

When setting their daily prices, hosts routinely make expensive mistakes. For many people, a yearlong flat cost is the most typical error.

Instead of focusing on the nightly fee, a good pricing strategy maximizes the entire booking value. You may achieve this by giving discounts for longer stays or offers for weeknights or after a high season when demand dips.

11. Make sure your calendar is up to date.

Displaying an out-of-date calendar might result in a slew of scheduling issues. Travelers may unintentionally double-book your hotel for the same dates, resulting in an unpleasant guest experience for travelers as well as a loss of revenue and potential consumers.

This becomes more difficult if you have listings on various sites, such as Airbnb, Vrbo, and Booking.com. It might be challenging to maintain your calendar up to date across all platforms if you don’t have the right tools.

This is where Lodgable, which specializes in vacation rental management, comes in handy. Lodgable is a top-of-the-line channel manager that can help you keep your calendars in sync across numerous platforms.

12. Promote your short-term rental on the internet.

• Make use of social media

You may promote your short-term rental on Instagram, Facebook, and Pinterest. Influencer marketing is another common and effective method. Generation Z and millennials heavily use social media. So, if you want to acquire reservations from this age group, in particular, don’t underestimate social media.

• Pay-per-click (PPC) advertisements

When you have a corporate website, this is an excellent strategy to use. When your target audience searches for particular keywords, There are several techniques to bring your website to the top of Google’s search results.

• Form local collaborations

You may arrange cooperation with local businesses to provide special discounts to your visitors and raise awareness of your rental property in the neighborhood. A local collaboration might provide a distinct benefit since most of your rivals will overlook this marketing strategy. Your visitors will be overjoyed to learn that by booking with you, they will be able to take advantage of local discounts while on vacation.

Creating partnerships with local cafés, museums, amusement parks, theatres, and movies is a wonderful idea.

• Make the most of SEO.

Search engine optimization (SEO) refers to the practice of increasing your website’s exposure in search engines in order to attract more visitors. To draw in more clients, this is done.

Vacation rental hosts that handle direct booking websites might benefit from SEO. Your website may operate around the clock to attract more visitors and improve your bookings by following SEO best practices.

• Provide exclusive offers and discounts

Offering specials and discounts is a marketing tool that hosts may employ to attract more reservations and be a component of a successful pricing plan.

When travelers realize they are receiving a good price, they are more inclined to schedule a stay. Offering a discount for weekday stays or a particular number of nights booked is a terrific method to attract new reservations while increasing your occupancy rates.

1. Is it advantageous to operate a vacation rental?

While every investment has some risk, owning a vacation rental home may be gratifying as well as lucrative.

Before you engage in a vacation rental company, think about the benefits and drawbacks of doing so and if you are prepared to put in the necessary effort. However, after you get the hang of it, you may be able to make more money than you would by renting your house long-term, for example.

2. What are the pros and cons of renting a vacation home?

Consider the following benefits and drawbacks when deciding whether or not owning a vacation rental is good for you:


  • More price freedom 
  • A more diversified portfolio of visitors 
  • The ability to provide extra services 
  • More control over managing your vacation rental properties than typical long-term rentals
  • Hosts are better protected since there is no obligation for a leasing agreement (such as Airbnb AirCover)


  • The market is competitive; 
  • You must follow local rules; 
  • Managing the property requires time and effort; 
  • You may have to deal with unpleasant or misbehaving guests or poor reviews; 
  • Your cash flow may be inconsistent at times during periods of low demand;

3. Is rental income from a vacation house taxable?

Depending on how frequently you rent out the room vs. how often it is utilized for personal use, the revenue received from your vacation house may be taxed.

The 14-day rule is used by the United States tax authorities to distinguish between a vacation rental property and a residential dwelling. The IRS considers your property a personal home if you rent it out for less than 14 days a year. You do not have to record the rental revenue if this is the case. However, if you rent out your home for more than 14 days in a year, all rental revenue should be included in your reported income.

4. How do I price my vacation rental property to get the best return on investment?

While the basic characteristics of a strong pricing plan have previously been highlighted, You should always aim to optimize your profit and return on investment when pricing your products and services.

This may be accomplished by keeping up with what your rivals are doing, watching demand variations in your property’s area, staying current on industry news and trends, and using dynamic pricing tools.

5. What should I provide in my vacation rental as a host?

Vacation rental hosts must guarantee that their visitors are comfortable and have a good time. That involves furnishing the living area with sofas and a TV, the bedrooms with good-quality beds, and the kitchen with practical equipment. After that, hosts may add extras, such as a Netflix subscription for the TV or luxury amenities in the bathroom, to make the stay more enjoyable and promote favorable ratings.

A host should also provide excellent communication so that visitors can be certain that their stay has been meticulously planned and that they will not be inconvenienced. Finally, a competent host will ensure that the home is kept immaculately clean.

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