Yearly rental contracts can be reasonably easy to manage because of the stability of having someone pay a monthly rental fee. However, what if you could turn that probably into an established vacation rental or short-term rental business?
Those that have turned to the vacation rental property niche are earning sometimes up to four times the amount then when they had their house or apartment on a yearly contract.
It is a fact that people expect to pay a far higher rate for short term rentals. People do not book into a hotel and expect to pay the same daily rate as they would if they were renting a local property in the area i.e., they don’t take a $12,000 a year apartment and divide this by 365 days and expect to get a daily rate of $33 per day. It just isn’t how short-term rental leases work.
The idea of a long-term rental contract is to minimize the management time involved. This leads us onto the short-term rental market. For that same $12,000 a year ($1,000) a month property, the owner can earn $40,000 a year but running the place as a business will take far more effort.
More money means more work, but when you look at the margins, it is very much worth the effort.
How Do I Assess If My Property Is Suitable to Run as A Vacation Rental Business?
This is the million-dollar question of them all. There are a number of factors that you need to take into consideration.
a. Your Target Market
If your property is in a city near the central business district (CBD), you should try to attract business clientele. If your property is in a city like New York, then obviously there is the chance that you will be able to attract both businesses who have staff that will stay and work in a local office for some time, and tourists want to be in the CBD in order to be close to some of the famous tourist attractions in the area.
If you do attract business clients, then make sure you create a vacation rental website. You will probably get your first clientele via websites that allow you to list your property for free. Once those people come to stay, try to meet them personally and introduce them to your website and encourage any future business bookings there.
You will be able to give them a far better deal because the website’s they found your place on will have charged you around a 20 percent fee for the booking and your guest a booking fee. With the lower price and the business connection, you are sure to gain plenty of repeat bookings.
b. Your Location
We have already covered location in the ‘your target market’ section to some extent. However, you still need to take some a few factors into consideration whether or not your place is suitable.
Is your property:
- Near shopping centers?
- Near good public transport?
- Near tourist attractions (beach, river, water park, museums, nightlife)?
- Near place that regularly hold festivals, concerts or conferences?
If the answer is yes to all or most of these bullet points, then your property is most certainly going to be a good contender for the short-term rental market.
Why stick with safe money, when you can take a risk and potentially quadruple your income. It will not be as easy as yearly rental deals, but for an additional few thousands dollars a year, it is most certainly worth checking it out.