Renting your home isn’t the secret to wealth, but it can provide you with a steady stream of money. Furthermore, today’s property owners find ways to increase their rental property profits.
When it comes to making money in real estate, it depends on how well you run your vacation rental business, how well your property is marketed, and how well you keep your property running smoothly.
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How to Start a Short-Term Rental Business
First and foremost, you must have a business strategy that describes what you want to accomplish and your goals. Writing a short-term rental investment business strategy might help an investor keep on track and avoid distractions. When considering a short-term rental investment, your business strategy should describe why you’re doing so and your monthly and yearly revenue goals.
A detailed business plan is required before moving on to the next step. Consider your guests’ comfort and convenience while preparing your home. Guest comfort is an important consideration while furnishing your rental property.
You’ll need to decide whether you want to manage the property yourself or engage a management company to get started. Who will be in charge of the house’s repairs and maintenance? Who will handle the financial aspects of the business?
It’s completely acceptable not to know everything about how to start a vacation rental business, which is why real estate professionals exist in the first place. Hiring a local real estate agent to assist you in finding the ideal rental home means that you can benefit from the agent’s knowledge and expertise in the local real estate market. Consider working with an expert from The Short Term Shop to help you grow your business.
How to make Money on Rental Properties
It doesn’t matter if you’re a novice investor with one rental property or an experienced investor with an extensive rental portfolio if you want to enhance your rental revenue. We’ve got a few ideas for you on how to make money on rental properties.
Set the Right Rental Price
Whether you’re trying to find a new tenant for your rental property or you’ve got a vacancy, you need to set a price. As long as you put the proper pricing, you’ll attract potential renters to your property and make money.
Not all one-bedroom apartments should be priced the same, nor should the price difference between one- and two-bedroom flats be set at a fixed rate. Unless the units are identical, this method will backfire on you in the long run. The more attractive a unit is, the higher the rent you should charge for it.
A good starting point for pricing your rental property is to look at the competitors. If you’re looking for rentals that are as comparable to your own as possible, you should look at the following:
- Location
- Number of Bedrooms and Bathrooms
- Type of Construction
- Average Rental Cost In The Area
Offer Additional Services and Amenities
People’s needs change with time, making the demands of a rental community. So paying attention to the latest trends in rental property amenities will help you stay on top of what customers are looking for.
Offering services to guests while on-site is another option to generate income. In addition to tailoring amenities for the type of guests your vacation rental is most likely to attract. It’s a hotel industry trend that vacation rental managers have adopted on how to make money on rental properties.
Among the most common rental property features:
- Swimming Pool
- Balconies
- Playground
- Clubhouse
When compared to amenities, services are temporary and less costly to maintain.
- Laundry Services
- Wi-Fi access
- Dog-walking services
Residents are more concerned with things that make their lives easier and less bothered with gimmicks they won’t use. Because of this, people are always looking for methods to streamline their everyday routines. Your tenants will be more content, and you’ll get a higher return on your investment if you focus on what they want.
List Your Rental Properties on Booking Sites
It is becoming increasingly vital to use vacation rental websites and marketplaces. They draw millions of tourists every day in search of renting a house for the first time.
Hosts can reach their ideal customers using vacation rental websites at the correct time and place. Start by marketing where potential guests hang out, and then you’ll have a better shot at attracting more bookings.
The following are some of the most popular websites for advertising short-term and vacation rental properties:
- Airbnb
- TripAdvisor
- Vrbo
- com
Listing your property on multiple popular vacation rental websites can help you earn more money. Find out more about each choice before deciding which one has the best potential for revenue and bookings.
Furnish Rental Units
If you’re a property owner, you may be wondering if renting a furnished or unfurnished house is better for your investment. Landlords can generally charge 40 to 50 percent more for a furnished short-term rental, but keep in mind that most people looking to rent for a short period anticipate the rental to be furnished.
Consider charging a greater security deposit because you’ll likely be paying more rent now that your property is furnished. As a result, it is expected that tenants would be more likely to take care of their rental property and its furnishings, including the couches and mattresses. Check to see if your state’s regulations allow for a higher security deposit than what you’re charging.
Maximize Tax Deductions
If you’re successfully managing rental properties and running a rental business, you should be earning money. A portion of your profit as a real estate investor will go toward paying taxes, which you will have to do. There are numerous tax deductions available to rental property owners, such as:
- Mortgage interest deduction
- Property taxes
- Rental property depreciation
- Travel expenses
- Repairs and improvements
All of your investment property’s costs should be documented clearly and concisely. To aid you with this, familiarize yourself with all of the different types of tax calculators available. Certain types of tax calculators can be a tremendous help when it comes to figuring out tax deductions. Beyond that, you should take advantage of the knowledge you’ve gained and hold yourself accountable to appropriate record-keeping practices when you make purchases and management decisions for your rental property that optimize your profit and allow you to take advantage of tax benefits.
Final Note
As you can see, running a vacation rental business isn’t all that different from starting any other type of business. And it’s not easy either. Streamlining your business processes demands a well-thought-out strategy, a talented team, and the right equipment.
Remember that making money renting properties is a long-term commitment. To run a successful rental business, you must constantly improve your property. So, consider this guide when deciding what works best in your rental home.