A How-To Guide for Starting Your Vacation Rental Business
Learn the steps to starting a vacation rental business, such as market research, property management, acquisition, preparation, marketing, and a business plan.
Are you looking to start a business in the growing short-term rental market? With the rise in popularity of vacation rental platforms like Airbnb and Vrbo, you have an incredible opportunity to capitalize on the demand for unique and personalized lodging experiences.
This guide will walk you through the steps of starting a short-term rental business with the help of our OwnerRez software which was explicitly designed by property owners and managers to help you streamline your own vacation rental business.
So, let’s begin your journey to becoming a successful short-term rental entrepreneur with the help of OwnerRez.
Plan Your Short-Term Rental Business
1. Create Your Vacation Rental Business Plan
When you become a vacation rental owner, you also become a business owner. It can be tempting to buy a property, list it everywhere, and see how it goes. But you’ll find much greater success (and much less stress) if you approach this new venture with an established business model.
This roadmap will play an integral role in deciding which property to buy and will also help you ensure you have all of your systems in place to provide a stellar guest experience from day one!
2. Conduct Market Research
With your business plan in place, it’s time to start narrowing down your property search. When choosing a short-term rental (STR) market, here are a few things to consider:
Management structure
Suppose you’re planning to self-manage the property. In that case, you’ll need to look into local markets that are easily accessible for frequent turnover cleanings, tending to guest requests, and anything else that may come up last minute. On the flip side, if you’re planning to hire a property management company, you’ll want to research each market you’re considering to ensure reputable ones are available.
Rental Rates
Use tools like KeyData to determine the health of different STR markets. These tools allow real estate investors to gain access to metrics, including:
- Average nightly rates
- Seasonality information that can help you set a dynamic pricing strategy
- And how many competitors there are in the area
The Surrounding Area
Your property’s location plays a vital role in the type of renter you can expect to attract and the seasonality of your rental income. For example, if your property is located at the base of a ski hill, you can reasonably expect to see wealthier renters and a massive spike in the winter season. In contrast, if you’re looking at a modest condo on the beach, you may see an influx of budget-friendly travelers during the warmer summer months. If you’re looking for a full-time rental property that makes a steady rental income year-round, choose a location that travelers seek out regardless of the season.
Find and Prepare Your Short-Term Rental Property
3. Buy your property
After determining your business plan and deciding on your preferred market, it’s time to find the right property. Working with a realtor who has experience in the vacation rental industry can be a huge plus because they can typically help you further refine your search.
They will also likely be familiar with the area’s zoning laws, STR taxes, local sentiment toward short-term vacation homes, and other helpful information that can lead you to a more informed decision. It is worth noting that some cities and HOAs have severely restricted or even banned the use of real estate for short-term rentals to address their dwindling inventory of affordable long-term rentals.
4. Form a business entity and get licensed
Forming a business entity such as an LLC and opening up a separate business bank account can help delineate your personal and business assets, offering you an added layer of legal protection.
You’ll also want to ensure you know the licenses and insurance coverage your city, county, or state requires for short-term rental homeowners legally operating in the area.
5. Stock your property with all the essentials
You’ll want to make sure your short-term rental is adequately furnished and properly stocked with everything your guests could need during your stay. Here’s a short list to give you an idea:
Kitchen:
Bowls, plates, silverware, knifes, cups, glasses, paper towels, hand towels, spices, coffee grounds, sponges, dish soap, cutting boards, etc.
Bathrooms:
Extra toilet paper, shower toiletries, towels, hand towels, plunger, hand soap, etc.
Bedrooms:
Comfortable bed, pillows with removable pillowcases, side tables, extra linens, etc.
It’s also fun to consider the local activities and stock your property with things guests can use while out and about. This includes bikes, beach chairs, outdoor games, and more.
6. Establish your vacation rental property management team
With your property ready for potential guests, it’s time to start your professional relationship with a trusted property management team. This is an important decision, so we compiled this comprehensive guide to help you navigate this process.
Develop Your Marketing Strategy
Now that your property is ready for your first guests to check-in, it’s time to let potential guests know. Here are a few ways to effectively market your short-term rental property:
7. Choose your listing site(s)
Third-Party listing sites like Airbnb and Vrbo can get your property in front of millions of potential guests. If you’re unsure which listing platform to choose, here is an extensive breakdown between Airbnb and Vrbo to help you make that decision. OwnerRez is a preferred Airbnb partner and an Elite Vrbo partner, so whichever platform you choose, you can rest assured that our software is compatible. We also offer integrations with platforms like booking.com, Trip Advisor, Home to Go, and more. You can see the complete list of channel integrations here.
8. Develop your website with OwnerRez
OwnerRez offers our users the opportunity to create a website from templates and pre-built pages designed specifically for short-term rental owners so you can benefit from direct bookings and rental listings you have total control over. In addition, our software allows you to connect your property’s listings from active channel integrations to your OwnerRez website so you can easily manage your occupancy rates and avoid double booking.
9. Take advantage of social media
Social media can be a great way to connect with your audience, leverage influencer marketing, and stay top of mind with potential guests.
Listen, Learn, Refine
10. Ask for feedback
Owning a short-term rental property can feel daunting, especially if it’s your first time. But over time, you’ll continue to deepen your understanding of the business and refine your guest experience. We encourage you to tap into guest feedback to help guide you in this process.
Congratulations on taking the first step toward owning a thriving short-term rental business! We hope you found this guide helpful in your venture. Seasoned property owners and managers built OwnerRez to help simplify the process with a suite of templates, automation, tracking functionalities, and more. Click here to learn more about the unique features that make OwnerRez the perfect tool for short-term rental owners as you establish and grow your business.