People are increasingly interested in getting into the company to benefit from the advantages of short-term rentals. What distinguishes short-term rental management from long-term rental management, though? Is it the best path for you to follow?
Continue reading to understand whether starting a vacation rental property management company is a good idea for you and how to make the process of managing your vacation rental properties more efficient.
What Is Short-Term Rental Management and How Does It Work?
The supervision and administration of short-term rental properties are referred to as short-term rental management. The manager or firm in charge of handling these rentals has a large list of daily chores to do, including
- Check-ins and checkouts
- Guest communication
- And so on.
In a nutshell, the major purpose of short-term rental management is to ensure that the business operates smoothly, that guests have a five-star experience, and that your return on investment (ROI) rises.
What’s the Difference Between Short-Term and Long-Term Rental Management?
The key distinction is the length of time the houses can be rented out. Short-term rental management deals with properties that are only rented for a few days at a time.
Another significant distinction is the sort of property rented out. Short-term rental properties are usually adjacent to the city center and popular locations.
Finally, it is more labor-intensive than long-term rental management. Short-term rental visitors have more demands than long-term rental guests; therefore, responsibilities like marketing and guest communication take more time.
Guests who book a short-term rental expect the property to be modern. They anticipate that the resort will provide basic amenities such as linens, towels, and other similar items. The expectations for the property’s general condition are considerably higher. In most cases, a property that needs refurbishment does not perform well as a short-term rental.
What Makes Vacation Rental Management Better Than Traditional Rental Management?
When you compare vacation rental property management to typical rental management, you’ll notice that each strategy has its own set of advantages and disadvantages. Here are a few of the most attractive benefits that short-term rental management can provide:
1. A higher return on investment
Vacation rental management can provide better returns on investment if a property is in a great location and has all the amenities that guests demand. However, to achieve this higher ROI, you must maintain a high occupancy rate, requiring expert management.
2. You’ll have more flexibility and control over your lodging.
When using vacation rental management, property owners can block out specific dates on the calendar. These dates can then be used for personal purposes, such as staying at your vacation rental or enabling friends and relatives to relax there.
Property owners will also have more opportunities to check the property because it will be occupied for shorter periods. This will make it easy to detect and resolve any concerns with your lodging as soon as possible. Not only will this provide you with more peace of mind, but it will also assist you in avoiding turning a tiny problem into a huge overhaul.
3. Vacation rental systems provide hosts with security.
Your house regulations, as well as the guidelines of the vacation rental platform you use, such as Airbnb or Vrbo, will provide you with the necessary protection. So, instead of resorting to a lease agreement and the courts, you can simply contact the platform through which they booked if you have a problem with a guest.
You can always develop a vacation rental agreement if you need more protection. This formal contract between the host and the guest outlines the booking’s terms and conditions. It’s a fantastic approach to protect all parties from misunderstandings, and it’s a lot easier to draught than a formal lease agreement.
What Are the Advantages and Disadvantages of Vacation Rental Management Compared to Traditional Rental Management?
While short-term rental management might result in a higher return on investment, it also entails more costs and labor. Before you dive in head first, here are a few of the most significant disadvantages to be aware of.
1. Added inconveniently
Because short-term rental rentals have a significantly greater turnover rate, there will be more effort to ensure that the property is ready for the next guest. You’ll also have the added obligation of marketing your property to ensure a next guest. Compared to traditional renting, numerous more duties must be accomplished if you want to succeed and grow in the business. From creating property descriptions to reviews, many more chores must be completed if you want to be successful and develop in the industry.
2. Seasonality may have an impact on your earnings.
Vacation rental homes provide income that is often seasonal. Events and attractions, for example, can impact the number of bookings from one month to the next.
3. You may be subjected to stringent short-term renting requirements.
Some localities have tight short-term renting policies, while others may outright prohibit it. So, before you sign any contracts, do your homework and familiarise yourself with the local legislation. If you can’t follow the short-term rental path in a particular place, you may always look into the long-term renting alternative.
4. Increased costs
As previously said, short-term rental management must cater to increased visitor demands. More amenities and items will be required, which will need to be restocked or replaced as needed. You’ll also have to clean your property after each booking, different from standard rental management.
How to Keep Your Vacation Rentals in Order
It’s time to examine alternative management approaches if you’ve decided to take the plunge and go the short-term rental way. There are numerous ways to short-term rental management that you can take, each with its own set of issues to consider before proceeding.
1. You can use a do-it-yourself strategy.
One alternative is to do it yourself if you wish to have greater control over your properties. You won’t have to pay costly property management costs this way. However, it can be time-consuming because you’ll be juggling multiple responsibilities. If you decide to go the DIY route, make sure to follow these steps to ensure a smooth start:
- Obtain the necessary business license
A regular business license and a short-term rental license may be required. You may also need a business license if the city you will be operating has unique short-term rental rules and restrictions. A property lawyer can provide you with additional information and assist you with applying.
- Define your objectives.
What do you aim to accomplish with your company? What is the maximum number of properties you want to own? In five years, where do you envision your company? You’ll have peace of mind knowing that all of the important areas have been covered if you set business goals and devote time to writing a business plan.
- Prepare your home and invite your first visitors.
If you go the DIY route, you’ll also have to prepare your home and find your first guests. Not only will your vacation rental require all of the necessities, but you’ll also need to provide extras to please guests. Several must-have and nice-to-have luxuries may make all the difference in the kitchen, living room, bathroom, and bedroom. Follow this extensive checklist to ensure you don’t forget anything vital when setting up your rental.
You’ll need to promote and market your listing to get your first guests. As a result, developing a marketing strategy to expand your presence outside the audience of vacation rental platforms is an excellent idea.
What kind of visitors do you wish to attract? Is your property better suited for business or family travelers? Choose a vacation rental website that is best suited for your business, and use social media to gain further exposure. On social media networks like Instagram and Facebook, you may, for example, offer special bundles.
2. You have the option of hiring a property manager.
You might want to consider hiring a property manager to help you manage your holiday rental. Professional property managers usually handle many aspects of your hosting routine, such as:
- Responding to booking inquiries and guest messages
- Managing reservations and cancellations
- Adjusting your rental prices
- Processing booking payments
- Supervising check-ins and checkouts
- Restocking supplies
- Arranging cleanings
- Writing guest reviews.
If you decide to hire a property manager, consider that there may be additional costs. An outsourced manager will charge between 20 and 40% of your rental income, depending on the location and nature of your property.
3. You can use a business specializing in short-term rental property management.
Unlike standard property management companies, short-term rental property management businesses may also assist you with hospitality and short-term rental rules. They have more capacity than an individual property manager to handle all aspects of your short-term rental business. They can assist with marketing and promotion, increasing the property’s exposure because they have their team in place.
However, enlisting the services of these types of companies can be rather costly. In reality, you can pay anything from 30 to 50% of your overall revenue.
What Should You Look For In A Short-Term Rental Property Manager?
If you’ve opted to outsource property management services, make a list of the chores you need help with first. Then, before you sign any contracts, conduct your homework by taking into account the following factors:
Word-of-mouth marketing is still effective, and for a good reason. Take the time to read the evaluations left by past customers to get a better idea of the services and overall quality that the short-term rental company or management typically offers. You can use Yelp, Facebook, and Google Business as examples.
Alternatively, you might request references from prior or present clients from the management or firms you’ve shortlisted. Following up with references has the advantage of allowing you to ask specific inquiries.
2. Price Obviously,
your goal is to select a service provider who can give you the most value for your money. It’s a good idea to make a spreadsheet to compare companies side by side to assist you in evaluating their cost-effectiveness.
Is it possible that a company is more expensive yet provides more? You might just discover that one provider is significantly less expensive than the others for a reason, such as a lack of positive ratings. This activity will also assist you in gaining a better understanding of how a certain organization can assist you in increasing your return on investment.
3. Information gathering and reporting
The importance of complete transparency cannot be overstated! Financial and performance information will be shared regularly by a solid short-term property management business. You should see how their property management costs are calculated and how your company has developed quite easily. At the very least, obtain a breakdown of your payouts, occupancy rates, and transaction history for each property.
Just because a property management business has a lot of positive reviews and years of experience doesn’t guarantee it knows everything there is to know about your market. A property management company that knows the factors at work in your local market is the ideal choice for your company. Their staff should, for example, be able to provide local recommendations to your guests, stay up to date on the latest regulations, legislation, and taxes, and develop a dynamic pricing strategy that works.
5. Customer service
For a positive guest experience, timely communication is essential. Poor communication and customer service are the quickest ways to damage your reputation with travelers. As a result, inquire about the property management company’s guest communication approach. The speed with which their workers reply to visitor messages and maintenance requests is two things to watch.