Are you looking to start a short term rental business but unsure where to start? Maybe you’re thinking of purchasing an investment property. Or perhaps you have a couple of rental properties that you’re thinking of converting to short or medium term rentals. Over the past few years, the popularity of short term rentals has increased for real estate investors because of websites like Airbnb and VRBO.
Short term rentals (less than 30 days) and medium term rentals (more than 30 days) are great ways to increase your rental income compared to having a long-term tenant. Medium-term can also have less wear and tear compared to a short-term rental. I also find that guests treat your home like it’s their own if they stay there longer (over 30 days).
Below I’ve outlined five tips to help you get started with your short-term rentals!
Will your home have unique features to differentiate it from the other homes on Airbnb? Will your property have certain amenities or cater to a specific niche? You can also adjust your pricing strategy based on seasonality and comparable homes in your neighbourhood. Other expenses to think about are management fees, cleaning costs, property expenses, utilities, and vacancy rates.
You are starting a business with short term rentals, so customer service, a business plan, a contingency plan, and income and expense statements are all crucial to the success of your short term rental business.
Another important note is to respond quickly to guests’ inquiries, build up positive reviews, and keep your listings current will also help your property rise to the top of the rankings.
Decide what type of property you’d like to turn into a short-term rental. Will you be converting your primary residence? Or another investment property? Are you looking for a condo or a house by a lake? Decide on a property type, location, and amenities that will attract your desired target niche and guests looking to stay at your property.
For example, Airbnb home locations close to hospitals can be great stays for traveling nurses or healthcare workers. These guests would be more long term (1-3 months), so if that is your strategy, you could look for a location close to hospitals. Whereas metropolitan areas can be great for short-term, weekend or week-long guests who are traveling for personal use. Another niche is business travellers.
While the daily income can be great with short term rentals, there are more upfront costs before your listing goes live. The biggest upfront cost (besides purchasing the property and your mortgage payments) will likely be the furniture and costs to furnish your rental. When purchasing furniture, it’s important to consider durability, comfort, and price. You’ll also want to furnish your home with a pleasant and inviting design.
Professional photography is crucial to the success of your rental. I know we all have cameras on our phones (and they are good cameras), but I promise you your bookings will increase when you have great photography. This will also help your listing stand out from similar listings in your neighbourhood.
Recurring costs include utilities (hydro, cable and internet, garbage pickup, water, etc.). The cost of your utilities will depend on your property type, home size, and location. If you need a business license from your city or town, that will also be a cost. Other recurring costs include cleaning supplies (or hiring a cleaning company) and replacing damaged furniture or kitchen supplies as time goes on.
It’s good not to get overwhelmed thinking about everything you’ll need. You’ll learn as you go and can adjust as you get feedback from your guests.
Will you be self-managing your short-term rental or hiring a property management company? There are a couple of short-term property management companies in Victoria, BC.
Depending on if you’re managing your rental from 5 hours away or living 5 minutes away, you may want to start thinking about your team. Will you use a cleaning company when the guest checks out, or will you do the cleaning yourself? Are you going to hire a short-term rental property manager? Will you communicate directly with guests about check-in times, check-out, and respond to any questions they have? There are also software tools for communicating with guests that integrate with the Airbnb platform to easily communicate with your cleaners and guests if you’d rather go that route.
I also recommend having a guest welcome booklet that you can print or email to your guests as a PDF once the booking is confirmed. I like to include nearby restaurants, convenience stores, parking stall numbers (if applicable), the home address, and any house or building rules. There are great Airbnb welcome booklets and templates available in Canva or Etsy.
It’s important to consider the guest experience since customer service and guest communication, templates, check-in instructions or automation software will help you achieve positive reviews from guests. And positive reviews can really help your short-term rental appear higher in the algorithms and confidence when a guest books your accommodation.
Each city or town has their own regulations when it comes to short term rentals. Before purchasing a property or filling up your online shopping cart, make sure you understand the laws and regulations that govern short term or medium term rentals in your desired town or city.
You will likely need to get a business license from your city or town. In Victoria, BC, a general business license for a rental that’s more than 30 days is not as expensive as a business license for short term rentals.
If you’re running a short-term rental business, you may be subject to paying GST on the business income. I’m not an accountant, so it’s best to check with your accountant to get their advice.
You may also need additional home insurance. While Airbnb provides limited insurance, it’s good to check with your current home insurance provider since you may need more insurance if you switch to a short-term rental.
With tenancy in BC, another legal point is that if you currently have a long-term tenant in your property, you won’t be able to evict them because you want to switch your property to a short-term rental. If your tenant gives notice to vacate the property, then once it is vacant, you can convert it to a short-term rental if you choose.
The great thing about Airbnb is that you have control over the dates, block off certain periods for your own use, and have more flexibility than traditional long-term rentals.
In no time, you’ll be getting a steady flow of guests and building your short-term rental business!
*Disclaimer: The topics of discussion, content and resources on this website are general information that may not be the right solution or advice for you specifically. Not intended to solicit buyers or sellers currently under contract with a brokerage.
*Stock images from Social Squares
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