You might have a guest house or other outbuilding on your property that is pretty much going to waste. Have you ever considered converting it and renting it out for short-term stays? It is a great way to bring in some extra income and become engaged with the emergent short-term rentals industry.
Companies like Airbnb, TripAdvisor, and Vrbo have capitalized on the gig economy to help homeowners profit from unused spaces. If you have been curious about the short-term rentals industry, then this post is for you! In this article, we will walk through the process of setting up a space as a short-term rental.
Ask Yourself, “Why Would People Choose My Place Over Other Listings?”
In any industry, you need to determine exactly what it is you are offering. In this particular industry, you must decide who you can attract and incentivize them to pick you over others.
Does your property offer proximity to a thriving business center, or is it nestled away in a sleepy forest? Either property can be profitable if marketed correctly. Maybe you offer a cheap alternative in a generally expensive area, or perhaps you are looking to attract wealthier guests in an enviable vacation spot.
You Must Play the Field
Though it seems trite, figuring out your audience is essential. Keep in mind that you can’t squeeze blood from a stone. True experts can take what’s given to them and spin it to make it work.
You may want to pretend your cabin in the Poconos is a luxury retreat in Aspen, but price hikes and putting on airs won’t attract the rich and famous to your cabin — you must play the field. Your competitors will be booked long into the vacation season, and you’ll be struggling to get even a 4th of July booking.
This brings us to our next point:
Know the Market and Your Competition
In order to appropriately play the field, you need to determine what you offer potential renters and understand that what you offer is entirely dependent on and situated within a larger market.
Ask Local Mentors
There will be more experienced people in operation around you. Ask them as many questions as you can, and hope to get something out of them. Usually, competition is unwilling to offer advice for free, so offer them referrals or some other suitable exchange to learn from their insights.
Learn About Your Local Economy and the Real Estate Business
Do your research on the local economy, the local housing market, and other important factors. Join groups that are involved in real estate, rentals, and other similar industries. Learning the terminology that commercial and residential realtors use when discussing and comparing properties will help add legitimacy to your business endeavor and help introduce you to other business and investment opportunities — such as residential or commercial real estate investing.
Only after figuring out exactly what you want to offer within the larger market should you start the process of tailoring the space to suit these needs.
Plan the Space
Now that you know your business model and have a better understanding of the surrounding market and economy, you can start converting the space.
How you style your space depends on so many factors that it would be out of scope to delve into here. Instead, we will focus on pragmatic planning.
Details Matter – You Need That Positive Review
You want your space to have well-functioning amenities and be stocked appropriately. If the rental space is located on your own residential property, consider having separate utilities for the rental space. Set up its own wi-fi, HVAC, and other amenities. Doing so helps you track costs better and keeps issues isolated if something were to go wrong.
Are you providing a washer and dryer? How about a full kitchen? If so, you need to have these areas well stocked and functional. Are you located near a beach or lake? Consider providing outdoor gear appropriate for the environment, or talk with local rental shops about a discount deal.
Think about the downtime in your space. Perhaps a family rented your location for a week’s vacation in an outdoor recreational area. However, the weather was unfortunately terrible for the duration of their stay. If you want a good review, you better have things for them to do during downtime:
- Think of games you can provide.
- Curate a miniature library.
- Provide art and craft supplies.
- Have a gaming console with an ample number of games.
- Make sure your entertainment amenities are modern and easily accessible
- Smart TVs with a variety of streaming services, etc.
If you take on the mantle of a short-term rental host, be prepared to always be on call. Because of the personal relationship between hosts and tenants, being personable, responsive, and willing to go out of your way is paramount to the health of your business. You are basically all hotel services rolled into one person — from maintenance to management, concierge, tour guide, and customer service representative; you are ultimately tasked with the happiness of your guests.
Maybe you can delegate some of these tasks to friends or family and make it less of an individually-managed business and more of a group effort.
Make Sure You Are Legally and Financially Covered
Know the Laws that Govern Your Area
You must familiarize yourself with your region’s ordinances and laws regulating rental properties. Each state has its own ordinances, regulations, and restrictions. Consult with a lawyer to better understand your rights and responsibilities and the rights and responsibilities of your tenants.
You Need Short-Term Rental Insurance
The chances of something going wrong get higher and higher after every incident-free week. This is especially true if your property is in a high-volume area. You can replace your current homeowner’s insurance with vacation rental insurance to be better protected against the issues that commonly arise with short-lease tenants, as well as the other risks associated with property ownership, like fire damage, theft, and vandalism. Many of these coverages are restricted or simply excluded on traditional homeowners policies so it’s important to verify that you have the correct insurance policy for your new venture.
Get Started Hosting Today!
It is a lot of work, but the financial benefits can be well worth the time and money spent on converting a space into a short-term rental. With the proper preparation and dedication, there is no reason why you can’t get in on the short-term rental industry.
About the Author: Veronica Baxter is a writer and legal assistant operating out of the greater Philadelphia area.
Verify Your Insurance Coverage Today
It can be tough to know what your policy covers without going through each possible scenario but that’s why insurance professionals are here to help. For these particular claims, a good place to start is with your current insurance agent. Send them your online listing and policy questions, see what they have to say, just make sure they’re getting the answer in writing from the underwriter of your policy.
If you still have questions or would like to compare your current policy to the custom short-term rental policy offered by Proper Insurance, give us a call at 888-631-6680 to receive a comprehensive coverage comparison or visit our website to submit a 5-minute online quote request today!