Properties all over the world are earning income as short-term rentals. You, by all means, can make money on vacation home rentals, too. This article will teach you how to self-evaluate your possible vacation rental for income potential. We will explore the two easiest ways to enter the vacation home rental market. Then you will analyze the G.O.A.L.S. of your specific property to determine your nightly rate.
The first thing to remember is that every vacation rental platform will give a suggested nightly rate for your property. Ignore their pricing suggestions. Every social home-sharing platform assumes your goal is to be rented one hundred percent of the time. For the purposes of our analysis, we assume your goal is actually to generate the highest profit despite how many nights the property is rented. In many situations, the route to higher profits will include fewer nights rented but an increased nightly rate. Follow this guide to determine your ideal rate.
This article will guide you in maximizing your earnings from vacation home rentals by strategically setting your nightly price. By evaluating your property against nearby vacation homes using five key criteria, you can optimize your rental potential and boost your income.
G = Geo-Demand
The demand for your property may fluctuate based on the time of year. This notion, known as geo-demand, refers to the popularity of your geographical area among travelers. For instance, mountain towns tend to experience peak popularity (pun intended) during winter sports season, while beach cities see increased demand as the temperature rises. Certain cities may have significant events that generate high geographic demand.
To keep track of times when your area attracts a large number of visitors, explore local calendars of events. Just because your vacation home rentals generate income seasonally doesn’t mean it cannot be a lucrative business. Many successful ventures have peak profit periods that carry them through quieter months. During low tourist seasons, consider setting lower prices to attract some income rather than none at all. Conversely, maximize your profits during high tourist periods by raising your prices when the demand for short-term rentals exceeds the available supply.
O = Occupancy
Increasing number of sleeping accommodations can significantly boost your nightly rate. Homes that can host fifteen adults will command a higher price compared to those that can only accommodate four. Consider adding bunk beds, sofa beds, or air mattresses to maximize occupancy. Regardless of the capacity, most homeowners can profit from vacation home rentals.
When travelers are considering vacation home rentals vs hotels, they often do a per-person cost comparison. For example, a hotel room that sleeps four people might cost them $185 per night. They might do some quick math and consider $46.25 per person per night a reasonable price. If their group has 15 people, that might equate to looking for a home around $693.75 per night. There are certainly other factors to consider, like the cost savings of not eating out for every meal, but increasing occupancy will be a major factor in being able to command a higher nightly rate.
A = Amenities
Luxuries undoubtedly help you make money on vacation home rentals. Travelers are often looking for features like hot tubs, pool tables, bicycles, hammocks or fire pits. Making your home especially kid-friendly with a crib, high chair, stroller and toy collection is a huge selling point. Investments you make on amenities will result in additional income. Your goal is to make your vacation home rental feel like a luxury hotel.
Embrace the opportunity of catering to niche-specific interests and amenities. For instance, explore the untapped market of gaming groups seeking a venue for their bonding experiences. Transform your home into the ultimate hub for video game enthusiasts. Additionally, consider creating a pinball haven for traveling competitive players seeking adrenaline-fueled competitions. Unleash your imagination and discover unique amenities that will elevate your vacation rental, enabling you to demand premium rates for an unforgettable experience.
L = Location
H situated in downtown areas can fetch significantly higher prices compared to those in rural suburbs. Similarly, properties with breathtaking views can command a premium over rentals in traditional residential neighborhoods. All of these locations have the potential to be exceptional short-term rental properties.
To determine a suitable nightly rate range, it is helpful to compare the advantages and limitations of your location with similar properties in the area. Inner-city properties, for instance, may have a lower per-night rate due to high supply, while more secluded and rustic properties may be able to charge a higher amount. It’s important to consider the unique dynamics of the vacation home rental market and identify the best comparables to ensure an accurate pricing for your listing.
S = Supply
Certain cities boast remarkably high concentrations of short-term rentals. Among them, London stands out for having the highest density of vacation rental homes. However, does this imply that profiting from vacation home rentals in London is an impossibility? Absolutely not. On the other hand, India, as a contrasting example, exhibits the lowest number of vacation homes per capita across the entire country. In regions with scarce supply, vacation homes are able to command a premium due to their rare availability amidst the local market.
When researching short-term rentals in your area, it’s important to check the availability calendar for each listing. A noteworthy observation is that professionally presented listings tend to have more booked dates compared to profiles with blurry photos and unclear descriptions. If you happen to be in a densely populated vacation home rental area, consider the unique characteristics that set properties apart. Homeowners are constantly deciding to exit the short-term rental business, leaving ample opportunities for new hosts to capitalize on the lucrative market of vacation home rentals.
Make Money on Vacation Home Rentals
Now that you have a grasp of the criteria you’ll be evaluating, let’s delve into some typical scenarios. While each home may be a distinct amalgamation of elements, grasping the concept is paramount. Remember, the essence lies in understanding.
Rent a Room in Your Residence
Both renters and property owners can participate in the vacation home hosting arena by renting out individual rooms. In this short-term rental model, you will share common areas with paying guests, making it essential to possess excellent interpersonal skills for this type of social home sharing experience.
The geo-demand of your property will depend on how often travelers visit your city. Keep in mind that no matter where you live, other residents of that community will likely have visitors on occasion. Your target market could be the families of nearby community members who have smaller homes.
Occupancy of an individual room for rent will usually be quite low. Make sure you research how much it would cost a potential traveler to stay at a vacation home rental vs the hotel. You will want to price yourself competitively so travelers don’t always opt for a hotel.
Don’t limit your amenities to just what’s inside the bedroom you’re renting. Stand out from nearby vacation hosts and hotels by offering unique features that add value to your potential guests. Having sought-after amenities will allow you to increase your nightly rate.
Appreciating location is subjective when it comes to travel. While many properties charge extra for stunning water views, a traveler might not prioritize or care about such views. Their focus might be on how much time they’ll spend away from the property and how little time they’ll have to enjoy the benefits. Keep an open mind about your typical renter and price your listing competitively against similar properties with location-specific features.
Harness the power of supply and demand to your advantage. Even a property with less-than-ideal attributes can command sky-high prices during low-supply, high-demand periods. Take, for example, a home near the Kentucky Derby site that lists itself for $10,000 per night all year round. While it may only get booked around the actual Kentucky Derby, a couple of nights per year can generate a significant profit and make a huge difference for a homeowner.
Rent Your Entire Primary Home
Just because a homeowner only has one home doesn’t mean they can’t become a vacation rental host. One-home hosting is exactly what the Homeowner Hustle E-course is all about. You rent your entire home to travelers and your family gets a paid vacation.
Rent out your primary home with geo-demand has its perks. You won’t incur extra costs during low traveler seasons, allowing you to live in your home year-round as usual. During high seasons, renters can come and go, effectively covering your residence expenses. Take, for example, the original Homeowner Hustler – they paid an impressive $41,331 over 53 nights, surpassing the $20,220 yearly mortgage.
Increase occupancy and nightly rates by optimizing your home’s versatility. Maximize sleeping rooms with bunk beds, convert social rooms into sleeping accommodations with sofa beds, and utilize any available space with inflatable beds.
Luxurious amenities hold value. Don’t underestimate the perks your home offers, like a full kitchen and living room, which most hotels lack. When comparing your offerings to competitors in the vacation rental and hotel sectors, consider the full range of benefits travelers receive.
Your location plays a significant role, with some groups willing to pay a premium for proximity to a convention center while others prioritize being close to the lake. Don’t undervalue your location; even in the suburbs, there are diverse reasons why groups may prefer to stay there rather than a downtown hot spot.
Large-group whole-home rentals are scarce in most markets. By positioning your home as one of the few accommodating high-occupancy options, you can reap higher profits.
How Much Can You Really Make Being aVacation Home Rental Host?
Increase your earnings beyond your current income level. As stated by Chris Guillebeau, “Inspiration is beneficial, but combining it with action is far superior.” Take a moment to relax and embark on your path to financial success through vacation home rentals starting today.