Investment properties. How to make it worth your while!
A rental real estate investment can seem like a great way to build your wealth and generate extra income. But, how often does it really work out that way? Owning a rental property in addition to your primary residence can create wealth, especially when real estate feels more comfortable than stock market investments or other investment avenues.
2017 data indicates that 47% Of Rentals Were Owned By Individual Investors. This makes perfect sense. Basically, your rental property pays for your mortgage and equity grows over time. However, rental property investments aren’t full-proof. The basic economics of short-term investment properties are attractive and outweigh the returns of long-term rentals. Here’s how the math works. You can buy an investment property rent it long-term for $1,500 per month, or put the property on Airbnb for $150 per night, making $4,400 per month. Now, that’s profit!
Airbnb knows who you are as a real estate investor. No matter what kind of property you have to share, Airbnb makes it easy to host travelers. You are in full, on-line control of things like: availability, prices, house rules, and how you interact with guests. They also understand your liability risks with renting your property and solve that for you. They Offer:
- Ability to require government ID before booking
- House Rules guests must agree to
- Chance to read reviews from past trips
- Free $1M protection for property damage
- Free $1M liability insurance
- 24/7 global customer support
While the math and ease of short-term renting is attractive, there are more complex things to consider when comparing short-term over long-term investment properties. If you plan on investing in an Airbnb property, you’ll need to fully understand: regulations, listing practices, clear communication, onsite
operations and guest expectations. All of these items are now considered “regular service” and equivalent to a hotel experience. You’ll need a strong sense of hospitality and planning, along with the focus to ensure each guest is treated well.
Maintaining a successful portfolio of short-term rentals is not a part-time gig. The daily commitment is not something to take lightly. If you want to try hosting/property management, you’ll need to understand some important industry terms and methods to the process.
Associations (HOAs)
Comprehensive listings are maintained by associations like Vrbo (Vacation Rentals by Owner) or VRMA (Vacation Rental Managers Association). If you choose to manage, joining associations like these can be very beneficial. They are great for industry information, networking and new trends. Members have access to local market licensing and bylaws, which is critical for successful short-term rental.
The Online Travel Agent (OTAs)
Three large OTAs in North America and Europe are Expedia (which owns HomeAway and Vrbo), Booking.com and Airbnb. OTAs have been around for a long time. The largest is still Booking.Com. Established in 1996, they have grown from a small Dutch startup to one of the largest travel e-commerce companies in the world. The booking.com website and mobile apps are available in over 40 languages, offer 29,006,647 total reported listings, and cover 153,519 destinations in 227 countries and territories worldwide. Founded in 1995, Vrbo is one year older than Booking.Com, when it comes to short-term rentals. Creative marketing has set Airbnb ahead in brand recognition, but really, they just refreshed the idea of a concept that have been around since the 90s.
Channel Management
Property investment manager like yourself, understand that in order to optimize occupancy (and revenue), you need to have excellent visibility. You should become part of multiple OTA sites in order to maximize revenue. Channel management software (like Rentals United or BookingPal) helps you avoid
double bookings. If you choose not to utilize channel management and your property appears on all of the OTAs, several people could book your property simultaneously from different sites. This will lead to the nightmare of dealing with double-bookings issue.
Property Management Software (PMS)
PMS is very important when managing short-term rentals. Many PMSs have critical operational functions like tracking taxes, reports, cleaning, maintenance, guest communication tools, management tools, as well as many others. Many PMSs started as local initiatives to deal with local laws (around tax and compliance) or other logistical issues faced by short-term property managers.
A really good PMS will save you time and money. Managing communication promptly is also critical for optimal SEO. A PMS like Guesty has an inbox feature that provides a central place to answer all guest queries and responses which go back through OTA apps like Airbnb. There are also PMSs like MyVR and Hostaway that provide email and FAQ response templates.
Managing Search Engine Optimization (SEO)
Search Engine Optimization (SEO) is the most significant way to stay ahead of your competition. You must be found in order to gain bookings! Most people associate SEO with website searches, your listing can be viewed as a landing page. This landing page needs to be found on Google and your OTAs. Many elements of your landing page creates better SEO: photos, reviews, timely responses to guests, and other factors will affect how quickly potential guests can find and book your property.
Secure Self Check-In (24/7)
Allowing 24/7 access to check-in for your guests is very important, especially to business guests, who are typically paying the highest cost per night with the lowest risk. In order to offer secure self check-in, you’ll need to think about access control. It’s also a critical element in a Smart Stay (a property that has property automation) to create a positive first impression with the guest.
The ‘Smart Stay’ Experience
Smart Stays make guests happier. Happy guests lead to happy reviews, which leads to better SEO and higher revenues. Best of all, with the plethora of smart choices and a minimal investment can provide you with reductions in operating costs.
For example, creating a Smart Stay check-in process is critical. For every minute a guest is waiting outside for a key to be delivered, or the more complicated the lockbox process is, the more stressed they become. That guest’s stress can carry over to the rest of the stay and into their review of you as a property manager.
During a Smart Stay, everything from lockbox entries to devices like thermostats can be easily activated with the touch of a button. You may want to invest in a noise monitor to ensure your guests have a pleasant stay (NoiseAware has good hardware for this). These monitors reduce risk, by making you immediately aware of guest violations. A Smart Stay can end with a self check-out and a digital “Thanks! and Please come back again!” message. And, of course, request that positive review!
Reviews
Online reviews can have a huge impact on the success of your rental property. Think of good reviews as critical for short-term rentals. Your reviews need to be great not good, in order for your OTA to show you at the top of the listings. Positive reviews are one of the most effective ways to build your reputation. If potential guests read bad reviews about your property, they simply won’t book. If people have bad experiences, they won’t rebook.
Managing your guest expectations is the really important to maintain. Warning people ahead of time that there is no blender or ironing board, they will be unlikely to leave a bad review. If you state you have these items and your guest doesn’t find them, they are more likely to complain online. Property honesty is the best policy. For example, if the property has boat access only with no WiFi, make sure to specifically call that out – some guests may be looking to avoid technology and relax.
Today’s traveler thinks of their “alternative accommodation” like a hotel. If you don’t have fluffy towels, good cutlery, decent coffee and excellent WiFi you will see it in the review. Most guests are not expecting top-of-the-line furniture, however, ensure that you have an excellent bed and sheets. This tends to be the one aspect in reviews that gets a lot of attention. And, of course, WiFi is critical for the modern traveler.
In Summary
Being a great host with a growing rental portfolio involves you being committed to the process. When you are focused on the import aspects and care about your guests, you should have no problem continuing to grow your business, year after year. You’re to alone. There are a ton of resources and people to help you get there!
If you have any questions, we’re happy to help! Contact us directly at BrandyCoffey941(at)gmail(dotted)com or 941.404.4737. Get my App! Click here Https://App.Kw.Com/Kw2qwz4vr/
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