Investing in Vacation Rentals: Expert Tips for Profit in 2024
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Investing in vacation rentals can be one of the best ways to make money. While selling properties at a premium is enticing, the long-term profitability lies in renting them out.
Choosing the right investment can be challenging, but we’re here to help guide you. Read on for expert insight into the realm of investing in vacation rentals and discover strategies to maximize your return on investment for your rental properties.
8 Expert Tips To Consider When Investing in Vacation Rentals
Many entrepreneurs and investors are taking the plunge into the real estate business. Renting out properties is one of the simple ways to invest in this industry. Doing so lets you earn money and maintain a steady income source for the long term.
In fact, many individuals and businesses are investing in vacation rentals for profit. The Grand View Research report predicted its global market size could grow from $82.63 billion in 2022 to $119.01 billion by 2030. It’s projected to expand at a compound annual growth rate (CAGR) of 4.7%.
A vacation rental business, however, requires proper planning and critical execution. You must stay on top of key considerations, such as:
- Tenant screening – looking for potential guests, clients, or tenants
- Property promotion – marketing and advertising your vacant properties
- Regular upkeep – cleaning, maintaining, repairing, and upgrading your properties
- Rent collection – processing rent payments for short-term rentals or collecting money for long-term leases
Take some of the practical tips from some business experts below. Learn how to make your vacation rental business profitable in 2024.
1. Find the perfect location
The location can make a difference in your real estate investment. It determines whether or not you’ll make significant profits from your rental business. Therefore, find or build a rental in states that are ideal for short- or long-term vacations.
Willi Olsen, CEO & Founder of LifeCovered, suggests studying the local market.
Olsen recommends, “Examine if your locality is in the heart of a city with famous attractions or a far-flung region perfect for a weekend getaway. See how your rental property can meet the vacation needs of your target clientele.”
2. Set an effective pricing strategy
The key to real estate business profitability is setting fair and reasonable prices. This means not pricing your vacation properties too high or too low. Low rental costs often equate to low profits, while high costs can drive your potential guests away.
Bruce (Mingchen) Chi, Co-founder and CEO of SuretyNow, recommends examining the standard rental pricing in your locality: “It takes due diligence to see what each rental property in your area costs. Also, you should factor in your property type and the amenities you can offer. That can ultimately help you decide how much your vacation rental business will be for each day or night.”
3. Implement robust marketing and advertising
The work doesn’t stop once your rental properties are ready for occupancy. Neither do you rest once your properties get listed on real estate websites. If you want to guarantee your properties remain occupied every day, you must constantly promote them.
Brooke Webber, Head of Marketing at Ninja Patches, cites the value of marketing and advertising for your vacation rental business.
Webber says, “Not only should you list your properties on various real estate sites, but you must also promote them on your own website. Likewise, invest in search engine optimization (SEO) and pay-per-click (PPC) advertising for online visibility and site traffic. Lastly, consider promoting your properties and engaging with potential clients via email and social media.”
4. Enhance aesthetics and functionalities
Turn your vacation rentals into luxury apartments with upscale appeal. By enhancing your properties’ aesthetics and functionalities, you can yield high returns.
When it comes to aesthetics, your properties must go beyond looking visually appealing on Instagram and social media. They must provide your guests with a cozy experience perfect for short- or long-term vacations. Likewise, invest in all amenities that your clients might need during their stay, from as simple as an electric kettle to as comfy as a queen-size bed.
5. Personalize the guests’ experience
Sure, you can invest in real estate with little or no money in 2024. However, the recipe for vacation rental profitability is offering guests the best experience. Personalizing their experience is key to business success.
While you might have a central theme for each property, customize them for specific guests. To do so, ask your clients what they need and want beforehand. Then, transform your rental properties and provide the amenities they need. Focusing on the client’s needs ultimately encourages repeat business and helps boost your overall profits!
6. Get insurance coverage
Like leasing and buying properties, renting also has pros and cons. Some possible drawbacks of vacation rentals include property damage, vandalism, theft, and accidents caused by the guests or brought by natural calamities. Hence, you must protect your rental business or the properties.
Shawn Plummer, CEO at The Annuity Expert, underscores the importance of getting business insurance.
“Not only does it protect you from financial losses, but business insurance also saves you from legal liabilities. Consider getting coverage, such as property, liability, contents, and business interruption insurance. You’ll thank yourself later for getting one, especially if an unexpected circumstance occurs in your rental properties.”
7. Consider property management
Property management is crucial to the vacation rental business, especially if you own multiple properties. A property manager can take care of your properties and guests. They can help protect your business with or without a crisis.
First, a property manager promotes your vacant properties and looks for potential clients. They also prepare rental lease agreements and take good care of your guests during their stay.
Lastly, they stay on top of cleaning and maintenance to ensure your properties are in top shape and working conditions.
“Property management in the vacation rental business is like having a reliable partner overseeing your properties while you focus on other aspects of your business. A skilled property manager not only markets your vacant properties effectively but also ensures seamless guest experiences through well-prepared rental agreements and attentive care during their stay. Moreover, they play a crucial role in maintaining the upkeep of your properties, safeguarding your investment and reputation in the long run.” – Gerald Lombardo, Head of Growth at Popl.
8. Stay on top of the local regulations
Like other businesses, vacation rentals should fully comply with local laws and regulations. Legal adherence goes beyond securing a business license to operate. Also, consider legal matters such as rental contracts, tenant rights, and local codes where your properties operate.
Javier Muniz, CTO at LLC Attorney, advises you to stay on top of laws and regulations.
Muniz explains, “Some things you must consider for your rental business include zoning regulations, building codes, and occupancy restrictions. You must not neglect health and safety standards, insurance requirements, and tax insurance. In the end, full compliance ensures financial protection and avoids legal ramifications.”
Final Words
Investing in vacation rentals can be a profitable investment. They can help you make more money long-term from your rental properties. However, you must make them work as a real estate business.
That said, follow the top tips shared by business experts above.
Start with finding the right location and end with complying with local regulations. But somewhere in between, set proper pricing, promote rental properties, and get insurance. More importantly, enhance your properties’ aesthetics and functionalities and offer guests the best experience. Lastly, consider hiring a property manager to take care of your vacation rental business.
With all these tips and steps, you can boost your vacation rental properties and maximize their income potential in the long run!
