Even amidst the uncertainty of 2020, investors across the world have begun looking to the vacation rental property market to generate an alternative source of income. In fact, with interest rates nearing all-time lows, investing in vacation rental properties has proven to be an option that, for some, is more feasible than ever before.
When effectively managed, a vacation rental property can generate levels of income that are significantly greater than those you’d find in the stock market, bond market, or elsewhere. However, these properties are not without their fair share of risk—if you want your rental property to generate the revenues you are hoping for, you will need to be proactive.
Fortunately, by making just a few small investments and changing your broader approach to management, you can position your property for long-term success. In addition to building your online reputation—using social media and platforms such as Airbnb—there are several time-tested methods that all vacation rental owners can benefit from using.
In this article, we will discuss 6 of the most useful things you can do to improve your experience (and outcomes) as an owner. By committing yourself to making the most of this significant investment, you can establish a reliable source of secondary (or even primary) income for many years to come.
1. Choose Your Market Carefully
In real estate, we often hear the term “location, location, location” and, as you might expect, the importance of location cannot be ignored when buying vacation rental properties. Choosing a location that has a reliable stream of tourism and can be easily accessed by a major airport will help increase the probability of having a full vacation rental schedule.
In the United States, the median center of population has been steadily moving both south and west, which has been extremely beneficial for states such as Arizona—a state that has roughly doubled in population since 1990. Phoenix, and cities near Phoenix, like Scottsdale, are in a unique position because they can benefit from both Arizona’s strong tourism market as well as a strong local economy. According to the Arizona Office of Tourism, Arizona enjoyed nearly 50 million overnight visitations in 2019, along with more than $25 billion in direct travel spending.
2. Hire a Vacation Rental Property Management Team
Owning a vacation rental property can be extremely stressful, especially if you own more than one property. Fortunately, there is a simple solution to overcoming these stresses and also improving your bottom line: hire a vacation rental property management team. These teams, which offer customized service packages for each client, will make it easy to be as hands-on or hands-off with your property as you want.
A vacation rental property management team can help with every component of owning a property, including managing finances, marketing the property, cleaning, and communicating directly with guests. “Sit back and relax while we handle the hard work with ease”, claims VacayAZ, one of the leading property management teams in Scottsdale, AZ.
3. Develop a Flexible Pricing Schedule
Finding the right price to charge for a night at your vacation rental property can be rather tricky. While you don’t want to scare potential guests away by charging too much, you also don’t want to miss out on potential profits by charging too little. Finding the perfect sweet spot for pricing has proven to be exceptionally challenging during periods of intense market volatility (like those we’ve seen in 2020).
Inevitably, demand for any given rental property will fluctuate throughout the year and even throughout the week. In the rental industry, it is typically standard to charge more on weekends and also charge more during a destination’s “busy season” (in Arizona, this is typically November through February). Additionally, there are plenty of people looking for great short-term deals—dropping the price at the last minute may help you avoid having your property go unoccupied.
4. Follow Up with Guests
The best vacation rental property companies make it “all about the guests” because they know that guests are the lifeblood of their entire industry. Taking the time to interact with each guest staying at your property—even if these interactions are entirely digital—will not only cause the guests themselves to feel as if you actually care, but will also help you gain valuable insights about how to improve the property.
Many guests will be willing to offer extremely blunt inputs about changes that are needed. If the oven stops working, if there is a shortage of paper towels, or if anything else needs to be changed, you’ll want to know about these changes as quickly as possible. Guests will also let you know about the details they really appreciated.
5. Encourage Repeat and Longer Stays
While you probably shouldn’t discourage or turn away single night visits to your property, these visits will not be nearly as cost-effective (or time-effective) as multiple-night visits. Rather than booking your property piecemeal with potentially 365 new visitors per year, you’ll be much better off trying to encourage both repeat visitors and multi-night visitors to the greatest extent you possibly can.
Following up with guests immediately after their stay—and perhaps offering an early booking discount—will encourage them to visit your specific property whenever they are in the area again. Additionally, offering further discounts (perhaps 10 percent off) for booking more than five nights at once will help encourage lengthier visits. When marketed correctly, you could help make your property their “home away from home.”
6. Create an Experience that YOU Would Enjoy
As a vacation rental property owner, it can be difficult to know which special details are actually worth investing in. Is it worth paying more for coffee and basic breakfast items? Should I pay for an HBO subscription?
To get a better perspective, put yourself in the shoes of your visitor. If you were visiting a property for a specific purpose, what are the things you’d like to see? While this likely means that you’ll end up deciding to spend a little bit more money, making these investments will improve your online ratings and improve the likelihood of future bookings. Ultimately, spending just a little bit more to make the property perfect is one of the best ways to improve your final ROI.
With your vacation rental property management team, you can create an ideal location that people of all kinds will consistently want to stay at. The vacation rental market can be extremely competitive, but with these helpful tips in mind, you will find yourself well-positioned for long-term success.