While researching for a vacation away, a business idea sprung to mind. What if you could open a property management business or even invest in your own property and rent it out at four to five times the daily rate you would get for a monthly rental contract?
After doing some research, some readers here that are property owners or happen to own a property that is available for rent, or even someone looking to invest some money into a business idea might be interested in what the vacation rental market has to offer.
In the scenario below, a property owner is making $2,000+ per month for a place that would normally rent for $550 to $600 a month on a yearly lease contract.
Searching For Holiday Accommodation Has Changed
Looking to book vacation accommodation online seems to be entirely different from how it was in the past. The web search results on social media and search engines such as Google have changed considerably. Rather than being offered fully serviced hotel rooms to stay in, there is now a myriad of websites that allow you to book your very own private villa, pool villa, apartment, or house.
When looking through these vacation rental websites it is abundantly obvious that the people renting these properties are making a lot of money. This was clear because some of them have hundreds of reviews, so they are obviously very busy.
Higher Daily Rates Than Monthly Rentals
After doing some research when looking to book a place to stay for one month, one criterion was to compare the monthly rental rate for a yearly contract from a local realtors website versus the monthly rate being charged by those offering their properties on the vacation rental websites. Well, the results were astonishing.
On a yearly contract, the rate would have been the equivalent of $550 per month. However, if you want to rent a similar place from a vacation rental website just for a single month, you would need to pay an average of $1,500 per month. This is after the host offered a 25% discount from the daily vacation rental rate being charged to stay at this property. This is great business for the property owner, and rightly so.
Rates should be higher for short term leases because that is just how the rental property works. Even on the local realtor’s website where the minimum rental contract was 3 months, the monthly rate was double that of a yearly contract.
$2,000+ per Month For a $550 a Month Property
Looking further into this, the daily rate for the vacation rental property varied from $60 a night to $75 a night depending on whether the available dates were on a weekend or weekday. For argument's sake let’s say the average is $67.50 per night multiplied by 30 days in a month. The total income for this property, if it were to be booked by vacationers throughout the month, would be $2,025 per month!
That is nearly four times more than the owner would get had the property been rented out on a yearly contractual basis.
How To Start A Vacation Rental Property Business?
Here are some pieces of advice that may come in useful. A great resource found while researching came from a company called Lodgify that has its own website builder. They look to be key players in this industry, and their website is full of useful information. A great place to start is on their vacation rental resources page.
Having your own property helps, but also there are ways to obtain people’s properties by opening a property management business. As a property manager, your responsibilities would be to look after the property and maintain it. Electric and water costs would be down to you as well. However, cleaning can be charged on the vacation rental websites, but you would need to arrange to hire cleaners on demand.
Other areas of the business will include key exchanges, meeting and greeting, or figuring out a way to run the business purely online. Some people can only run their vacation rental online because the place being rented is their holiday home. That usually means they do not live close by needless to say! Key exchanges can then become difficult of course, so a remote system in which a key code can be used and controlled remotely, or the key could be left in a mailbox and the code changed regularly.
You would also need to manage listings on a vacation rental website. However, if you may want to consider listing the property on all the vacation rental websites out there, then also creating your own holiday home website.
Next, you will need to manage inquiries that are sent by people interested in booking your property. These will all be online inquiries, and remember the travel business is 24/7, so you may even want to consider hiring people to answer inquiries while you are not available.
Lastly, your review will be your bread and butter. There is no way you are going to get any bookings if your property is full of bad reviews. This is the only stumbling block anyone new to this industry will have to overcome. When trying to have your property booked over the competition, having no reviews is tough. You will need to think of some imaginative ways to get people to book your property so you can get reviews in order to encourage more bookings for the future.