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How to convert your house into a vacation rental?

There has never been a more appropriate time to convert your home into a vacation rental property. Short-term vacation rentals have grown in popularity over the course of the past decade, and the outlook for future development is promising.

Making your home a holiday rental isn’t as difficult as it appears. However, it is not as simple as some of the more famous rental websites would have you believe. There are a few crucial measures to take before listing your house on a booking service, and there will also be other considerations when visitors arrive and depart.

This article will take you through the key points to remember for the perfect vacation rental.

1. Firstly, research about your local laws

The first step is to ensure that short-term vacation rentals are legal in your city, as several have outlawed or severely regulated them. In other places, there may be some red tape to deal with, such as obtaining a business license or registering with the city.

You also need to check with your neighborhood’s homeowner’s association, as they sometimes prohibit short-term vacation rentals as well.

2. Research about your local market

Next, research your local market, specifically how popular it is. Is there a strong demand in the area for short-term rentals? Are you close to a big city, a great beach, a local college, or another attraction that might entice visitors?

This is essential for building a solid business case for your rental property.

3. Get the right type of insurance

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Having a short-term vacation rental entails some risk. Guests can cause damage to your home and belongings, and there is also the issue of liability to consider.

For these reasons, most standard homeowners’ insurance policies will not cover short-term vacation rentals, at least those that you intend to rent out on a regular basis.

Consider adding a short-term rental policy, landlord insurance, or business insurance to ensure your protection. Your insurance agent should be able to help you with this.

4. Prepare the property

Once you’ve determined that your market has real potential, you can begin preparing the rental property. First, depersonalize the space by removing anything of sentimental value.

When guests walk in they want to feel like it’s THEIR space. Any trace of your life will disturb that experience for them.

You should also perform any necessary repairs and correct any long-forgotten “quirks” if any exist. Because you may be used to the creaky door or the lock that closes only a certain way but your guest isn’t. 

Finally, consider the experience you want to provide your guests. To help you market the property to remote workers, you may want to update the furniture or decor, install new technology such as smart thermostats or smart locks, or add a workstation.

5.Create your systems and processes.

Preparing your rental property is only the beginning. You’ll also need systems to keep track of everything. How will you handle reservations? What about cleaning and stocking the property in between visitors, or dealing with questions and concerns?

If you don’t have the time to manage the property yourself, you can hire a property manager to do so. These have fees, but depending on your schedule and how frequently your property is booked, they may be worthwhile.

6.List your property

Finally, it’s time to get your rental property in front of the public. To begin, you’ll need photos of your property, preferably professional ones. According to statistics, professional photos can provide up to 20% more bookings and 20% more earnings.

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Then choose a popular listing platform like Rezo Property Management to create your listing and create a compelling listing description for your property. 

7.Maintain a locked closet and cabinet.

Whether you intend to use your rental property for personal visits or simply as an investment, certain belongings will almost certainly require a secure home on site. You’ll also want to keep supplies needed by your cleaning and maintenance staff out of sight of happy vacationers.

Set aside a locked closet or cabinet for tools, supplies, and personal items that you don’t want guests to see.  It will provide a five-star, vacation-focused experience for guests, as well as additional peace of mind that any items you must leave behind are safe and secure.

8.Set your house rules

Setting rules for your vacation rental is much easier said than done. How many rules are too many? How many is too few?

When making rules, put yourself in the shoes of the visitor. Consider what they might need to know about your rental and the surrounding area. Here are some questions to consider:

  • Are you going to allow pets?
  • Is there something they need to know about the neighborhood
  • Can guests use the washer?
  • Do doors need to be locked at all times?

House rules should be pasted in highly visible or accessible areas so that it’s convenient for the guests to find. 

9.Guest experience

Respond to guest inquiries promptly and provide clear, concise information.

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Encourage guests to leave reviews following their stay. Positive feedback can help your rental’s reputation.

10.Check ins and check outs

Choose a key exchange method, such as in-person, a lockbox, or a digital key.

11.Property maintenance and security

Maintaining your property on a regular basis will ensure a positive guest experience.

Regularly inspect your rental property for safety hazards and address them as soon as possible.

Pros and cons of vacation rental

Pros

  • Having a vacation rental can be a great way to boost your income. You can charge higher rates, especially during holidays and weekends, which means more cash in your pocket. It’s a win-win situation for hosts
  • When you’re running a business, taking advantage of tax deductions is crucial to save money. Think of it as a way to keep more of your hard-earned cash in your pocket. You can deduct a bunch of stuff, like maintenance costs to keep your business space in tip-top shape, utility bills to keep the lights on, mortgage interest if you’re paying off a property used for your business, and even hosting fees for your website or online presence. So, make sure to keep track of all these expenses, because they can add up and help reduce your tax bill.
  • You have the option to enjoy a personal getaway at your vacation rental for a week. However, it’s essential to keep in mind that during this time, you won’t be able to generate rental income from it, which could impact your overall profits.

Cons

  • Higher Upkeep and Maintenance- Vacation rentals necessitate more upkeep and maintenance. For example, you may need to hire someone to clean after one guest departs and another arrives.
  • Unexpected Expenses- With increased maintenance, unexpected costs may arise. After all, when you have several people in and out of your vacation home, things are bound to break or go missing. 
  • Local laws and regulations vary- Short-term rental laws differ from city to city and state to state. Short-term rentals are prohibited in some areas, while vacation rentals are permitted in others. As a result, before putting time and effort into your investment, it’s critical to research which areas allow short-term rentals.

Frequently Asked Questions

How long does it take to rent your property? 

The average wait time for a market-ready property priced at market rates is about 26 days. It may take much longer if your home is not in marketable condition or is not priced competitively. Vacancy periods can also be influenced by the area’s overall vacancy rate and the time of year, as properties tend to rent faster during certain seasons, such as the summer.

Do you need a property manager?

A property manager can help you streamline the entire rental process. They have professional experience screening tenants, effectively marketing properties to reduce vacancy periods, and preparing properties for rent. This means you’ll spend less time dealing with your rental and have more peace of mind.

Is it advisable to ask for a higher rent at first?

It’s a tempting idea, but keep in mind that tenants and homebuyers are not the same. If a prospective tenant believes your property is too expensive, they will simply move on to the next property. When searching for properties online, many tenants enter a minimum and maximum rent they’re willing to pay, so if you inflate the price, your listing won’t even be displayed to a large number of searchers. This means you may lose qualified tenants and your property will remain vacant for a longer period of time.

Another reason to think twice about charging a higher rent on purpose is that interest in a newly available property is highest during the first two weeks of advertising, with a sharp drop-off after that. To avoid losing money on a property that is simply sitting empty, list your best price first.

Who pays for rental property maintenance costs?

The landlord does the majority of the time. Unless you can show that the tenant caused damage or was negligent, this generally counts as normal wear and tear on the property.

Short-term vacation rentals are a great option if you have a second home or want to invest in rentable real estate. The market is expected to grow further, so why not capitalize on the craze?

Yes, there will be some work involved, but by following the steps outlined above (and with the assistance of industry professionals), you will be well on your way to generating passive income in no time.

 

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