Tips for Making money with Short term rentals
Most people know me from my “regular job,” selling all kinds of chemicals and ingredients, and as the owner of Level 7 Chemical and Supply. But since I was in my early 20s I have been in the business of buying and selling real estate. I have held real estate as long term investments, as well as flipped homes for a profit. Over the last 10 years, my focus has been on finding homes and earning income in the short term rental market using online sites like AirBnb and VRBO. Here a few tips and hacks that I have found useful to make the short term rental model work for our family.
Location Location Location
The popular saying about location is very important, and true in all real estate. Location does matter. however, I am going to suggest that sometimes you can bend the rules a little bit and make more money in the short term rental market. We bought a home several years ago on a very busy street near two schools. The original idea was not for short term rental use, it was to use the home as an office. But plans changed and we moved the home to short term rental. It is a great layout and has 4 bedrooms and 2 baths, and we knew from the start it was going to be a great place for families, or groups, but the traffic was a concern. What we noticed though is that the traffic was cut in half from Friday afternoon about 4 PM after kids got out of school, and through the entire weekend. We felt we had gotten a little better deal on the home because of the high trafic, but when we started renting it out as a short term rental, we found out that traffic was not such a problem because this home was usually occupied on weekends when traffic was much lighter. If you find homes near schools or even a business and they are closed on the weekends you may be able to negotiate lower pricing and come out a winner in the short term rental market.
One warning about location and short term rentals. In the last few years many municipalities, especially larger cities, and cities with a lot of growth, legislation is getting passed to restrict short term rentals. Make sure that before you make an offer on any home for short term rental purposes, check the neighborhood cevenants, as well as local city ordinances and make sure you can do short term rentals at that particular address.
Home Inspections and Maintenance
Home Inspections and regular maintenance will make you money long term and short term . When you buy any property, for any purpose, whether short term rentals or for long term rentals or if flipping homes, you should take the time and do house inspections in some shape or form. I would suggest hiring a specialist that does home inspections fulltime, OR, getting a few specialists in particular areas and have them inspect their areas of expertise and get every major system inspected thoroughly. Major systems to get inspected include the heating and air system, the electrical, the plumbing, the roof, ALL need to be inspected thoroughly, and get the inspection(s) in writing so that you can negotiate with the seller to get the systems brought up to par, or you can negotiate a lower price to get the repairs made. Do not skip any part of an inspection to save money, and find real specialists that are very thorough. Keep in mind that with short term rentals homes get a lot of wear and tear if they have occupants every weekend and you must inspect, and then keep repairs up. Having a baseball team, or a bachelor party group, or a large family in a home even when it is JUST on weekends really wears a home out. So, in addition to getting the home inspected when you buy it, I suggest you also inspect property every 6 months and keep up with maintenance. It will save you money in the long run. Keeping property maintained will make you money. Having an air conditioner go out on July 4th weekend becuase filters were not changed regularly is a huge time waster and a huge waste of money. Keep property maintained from the plumbing, electrical, roof, to the furniture and the paint to make the most money in the short term rental market. Home inspections and regular maintenance are critical when you have short term rentals.
Study rental rates and review regularly
A lot of people make the mistake of thinking that real estate, and particularly short term rentals is “passive income” and that making this passive income does not take work after you list the property on a short term rental site. Unless you give up large fees to management companies, rental property is not passive at all. In addition to the tips above, about keeping property maintained, and selecting good property at good locations, you will need to keep up with local rental rates, and review the rates you charge to maximize profits. Sure, many people get started with Airbnb and VRBO and charge lower rates than local short term rentals, and then raise the rates as they get reviews. But after you get a few reviews you have to keep studying, and know WHAT to study. You can start with using the information on rentals on local listings on the sites you use like AirBnb and VRBO, but that is only a starting point. In addition to rental rates, also look at minimum stays on those listings, then look at what other amenities are offered compared to your listing/ property. There are also apps and websites for helping aggregate the data so that as you add short term rental units the data about rental rates is right at your fingertips. A few of the pricing popular pricing tools are Beyond Pricing and Wheelhouse. Check those out tools as you get started, and you will be way ahead of the game. The tip here is to study up on the listings in your area, and keep prices and cleaning fees competitive but, in my opinion, do not be the low price. Keep your property maintained and keep prices higher to maximize properties.
I hope these three tips help you make MORE money on your short term rentals. If you are visiting our beautiful state of Arkansas, or vacationing at our favorite beaches in Orange Beach Alabama, we hope you will consider our properties for rent. Check out our website Hughey Properties and check out our properties here. Check out our beautiful 4 bedroom 3.5 bath home right on the lake at Greers Ferry Lake in Arkansas, as well as a top of the line 3 bedroom 2 bath condo right on the beach at Phoenix V in Orange Beach Alabama. We would love to host your family or group. We are adding a few new properties in 2022 so check back regularly.