In his April 2021 CNBC interview, Airbnb CEO Brian Chesky predicted, “To meet the demand over the coming years, we’re going to need millions more hosts.” That’s millions more owners and managers, offering houses, apartments, condos and private rooms to leisure and business travelers seeking the flexibility, convenience and privacy of a short-term rental or vacation rental. So how does a new STR investor or experienced host take advantage of this expanding demand, while making their property stand out in an increasingly crowded field…and generate greater and more consistent profit? By following these four guidelines, for starters.
- Market like you mean it.
- Be a good neighbor.
- Avoid licensing fines and penalties.
- Budget accurately for short-term rental expenses.
1. Market Like You Meant It
The best way to increase your vacation rental income is to ensure consistent occupancy. And the best way to do that is by making marketing your top priority. It’s not enough to just list your rental property on well-known short-term vacation rental portals like Airbnb and VRBO. To really maximize booking frequency and get top dollar for your property, you have to expand your exposure, and show off your rental’s best assets beautifully.
Photos are the single most important factor potential guests consider when viewing your listing. No matter how delightful your property description or glowing your guest reviews, if your photos don’t show your rental in the best possible light, guests are unlikely to book. Stage your rental space meticulously by opening curtains, hiding trash cans, neatly stacking or hanging towels, making all beds, fluffing sofa cushions, and adding a few “extras” like flower-filled vases or a few cookbooks in the kitchen.
Then have a professional photographer photograph your rental, or shoot high-definition images with a high-quality digital camera yourself (not your mobile phone), inside and out. Room photos should show different angles, while exterior photos should showcase featured spaces like the firepit, lounge area, deck or pool.
Pro Tip: Consider investing in a “virtual walkthrough”—aka a 3D tour—which helps guests picture themselves inside your property, and can boost your occupancy rates significantly.
2. Be A Good Neighbor
Maintaining your rental property and preventing guest noise, occupancy limit violations and unruly behavior isn’t just a matter of neighborly consideration. These steps are directly connected to your vacation rental income. Why? Because frustrated neighbors may interact negatively with your guests, impacting their experience and, ultimately, their reviews of your property on listing sites. This may happen when guests are in violation of rental rules. However, it also may happen when they’re not technically breaking rules, but are still creating real or perceived problems for neighbors.
In some cases, neighbors may complain to you during or after the disturbance. Or they may take a more direct route and contact the police. If your guests are behaving in violation of your rental rules or of local ordinances, the responsibility is ultimately yours. To keep the peace with your neighbors, and avoid having to deal with local authorities, or city or county permitting bodies, regarding noise complaints, take a proactive stance on protecting your property.
Installing a privacy-safe noise-detection device is one of the best ways to prevent guest volume from getting out of hand. A small, nonintrusive, wall-mounted noise-monitoring unit that measures decibel levels, but does not record noise or identify specific sounds, will help protect your property, while protecting guest privacy. By gently notifying guests when volume exceeds allowable levels, a noise-detection system takes the pressure off both you and your guests, and helps ensure that neighbors don’t intervene in, complain about or report noise incidents.
Pro Tip: Don’t forget outdoor noise protection. Especially in warm-weather vacation areas, guests are likely to gather and celebrate outside. An outdoor-mounted noise device helps deter excessive volume where it’s most likely to reach—and annoy—neighbors.
3. Avoid Licensing Fines & Penalties
In cities, counties and municipalities that require special short-term vacation rental permitting, certain requirements must be met in order to obtain a permit or license. These typically include verifying on-site safety and sanitation measures, having ample parking availability, limiting occupancy, posting signage and having a designated “agent” or contact who can be reached by guests during their stay.
Increasingly, vacation-rental regulations and STR regulations are also addressing guest noise. As post-pandemic travel expands, and local councils revisit short-term-rental ordinances and review local residents’ concerns, some cities and counties are making on-property noise detection a requirement for obtaining a rental license.
All requirements for obtaining a permit should be clearly outlined in your local short-term-rental ordinance. Some will require inspection verification, others require self-reporting. Almost all requirements have associated fines and penalties for first, second and subsequent violations. Permit-violation fines typically range from $250 to $1,000, and repeated violations may result in the revocation of the rental permit.
Whether you’re paying penalties or facing the loss of your rental permit altogether, violating STR regulations is a serious legal and financial matter. A great way to protect your vacation rental income and avoid surrendering profits to your city or county is to always maintain compliance with short-term rental rules.
Pro Tip: Hire a property management company. A qualified management company that has expertise in short-term rentals will be familiar with all local codes and regulations, and will help with permit applications, compliance, maintenance and enforcement.
4. Budget Accurately For Your Short-Term-Rental Expenses
While short-term rentals and vacation rentals can be excellent sources of revenue, the income they generate isn’t completely “passive.” Unlike long-term leases and rentals, where once an agreement is signed the tenant is more or less on their own (except in urgent or emergency cases), short-term rentals require regular maintenance, restocking, marketing and booking-transaction management.
It’s important to have a documented budget for your rental that includes all daily, weekly, monthly and annual expenses. These may include:
- Cleaning and sanitation services between guest stays
- Utilities and regular maintenance, such as garbage collection
- Up-front and replacement furniture and linens costs
- Up-front and replacement kitchen, dining and cookware/serveware costs
- Up-front entertainment and activity equipment costs such as beach toys and games, board games, books, premium TV channels or streaming services, wifi equipment, Bluetooth speakers, etc.
- Consumables, including: toilet paper, paper towels, shampoo and conditioner, body wash and lotion, dish soap and sponges, dishwasher pods or detergent, extras such as coffee, bottled water, wine or beer, etc.
- Rental insurance
- Marketing costs
- Principal/interest on the property’s mortgage
- All applicable taxes
With an accurate budget and regularly-maintained expense report, you’ll be able to price and market your property accordingly (taking advantage of seasonal travel and local events that might draw guests, reducing rates and offering specials to encourage off-season travel, raising rates and having stricter cancellation policies during peak seasons) to make sure you cover all costs and maximize your short-term vacation rental income, now, and for the long term.