Five Steps to Vacation Rental Short-Term Investing

You own or are thinking of owning a short-term rental? It does not have to be in Solterra Resort (although we hope it is!)

Stop what you are doing and read on for a few minutes, it will save you time and make you money.

The steps are:

1.) Research - do your research to ensure your short-term business will be legal and profitable

2.) Choose a property that lies in our model's "profit zone"

3.) Renovate and furnish the home to give it the "X Factor" or "Wow Effect"

4.) Hire a booking agent or management company you can trust to market your home to the world - and if you have time...help in the effort - this will boost your occupancy and profits

5.) Handling the additional vacation rental bookkeeping responsibilities including paying sales, tourism, and occupancy taxes

Step 1 - Do your research!

First off, take a quick google search to make sure the zoning requirements are "A OK" for you to run a short-term rental business, you don't want to get shut down right after you start and loose money.

Next, do some market research on HomeAway / FlipKey / AirBnB. On this site, I have a free downloadable template to help you run a short and simple "Comparables Analysis" (sounds complicated - its really not!) to help you find out what rates you can earn. Look at your home's pictures compared to what is on the market and price your home accordingly.

Run a financial analysis (quick profit and loss statement) on gross rental income minus expenses such as:

• Mortgage if you have one

• HOA Fees

• Electricity

• Water

• Cleaning Supplies

• Soaps

• Linens and Towels

• Cable

• Internet

• Licenses and Taxes

• Baby Safety

• Pest Control

• Security

• Pool Care

• Lawn Care

Make sure after running this analysis - the investment makes sense. In Solterra Resort, and in many other resort communities across the world, these numbers can be tremendously profitable. If you need help running the analysis - drop me a message and I can help you.

Step 2 - Find the Dream Income Property with a "Wow Factor"

The home needs to have the right combo of amenities, bedding arrangements, and distance to attractions.

For example, you want to find the home with a private south-facing pool minutes from the Disney parks with the optimal number of beds to fit a large group if you are in Central Florida - if you are in Aspen you should be close to the sloops with a view - if you are at the beach you want to be within walking distance - you get the picture!

Step 3- Renovation and Furniture

The first thing guests see when looking for a potential vacation home is, you guested it, the pictures!

If your furniture is outdated, lackluster, mediocre - whatever you call it, your booking conversion from the booking site will suffer. Furniture may run as low as $10,000 to as high as $65,000 - but this expense is well worth it if you want to make money by commanding premium rates.

Include plenty of pots and pans, plenty of towels - all of the little things that would prevent a complaint and make the guest stay a great one.

If you need help with furniture vendors or design, please drop me a message.

Step 4 - Booking Agents and Management Companies

Assuming you are a busy professional and cannot self-manage your short-term investment...you will need to find a trustworthy booking agent or management company to generate quality bookings and make you money.

There are dozens of vacation rental companies in tourist heavy areas, and a quick google search will help you find the big ones.

I run one myself, if you are in Central Florida give me a ring! If you are not, companies like Evolve / RedAwning, etc. can help out.

Dynamic Pricing Tools - Setting your rate strategy is critical and it can make or break your profitability and rental experience. I developed a sensitivity table to show you potential income at different price points and occupancy levels.

Income Potential Matrix

At my company, I use sophisticated pricing tools and comparable analysis to set rates, but there are some tools that do-it-yourselfers can use such as usewheelhouse.com and beyondpricing that can help you set your rate strategy.

If you do not know what you are doing - PLEASE do not attempt this as you can end up pricing too low, losing valuable dollars or too high scaring away guests.

Step 5- Accounting and Bookkeeping

Short bulleted list to make sure you have your ducks in a row!

Tourist taxes - 12.5% in Polk (and at Solterra) and 13% in Osceola County, but this will vary and you need to look up your locality to make sure you are collecting the right amount of taxes

Sales taxes - may be separate or included in the above, but you need a sales tax receipt from Florida to collect, ask me how to get one and I can help out

Occupational Licenses - these may be necessary so account for them

Property Management Software - will help track inventory, expenses, bookings, etc. in a REALLY easy way. My company uses CIIRUS, but there are other softwares such as Lodgify and LiveRez that work just as good.

QuickBooks - helps to manage financial statements when you run a large Vacation Rental co.

Mylodgetax.com - great way to track lodging tax and is HomeAway recommended!

Well, there you have it. All you need to get started. I will be writing another post on using different booking channels to get you started (HomeAway, AirBnB, booking.com, etc.)

If you need a good financial model to forecast and project income and expenses, drop me a note and I can send you one. I am happy to help owners become successful. Cheers!

John

#shorttermrental #shorttermrental #shorttermrentalinvesting #shorttermrentalinvestor #realestateinvesting #realestateinvestor #solterrainvestment #vacationhomerental #vacationvilla #vacationrental #davenport #florida #disneyinvestment #disney #solterraluxuryvillas #solterraresortluxuryvillas #disneyvacation #disneyvacationhomes #homeaway #airbnb #flipkey #rates #ratestrategy #ratemanagement #propertymanagement #vacationrentalmanagement