Tips for setting vacation rental rates

Having a vacation rental might seem like a relatively easy way to earn extra income. But unlike leasing residential properties, there is more to consider if you plan to rent a home to 50 tenants-a-year as opposed to just one.  You have to do some research to get an idea of what it should cost to rent out your vacation home. Here’s our step-by-step guide to setting your vacation rental rates:

1. Review Comps Do some research online. Tools such as Craigslist and property management websites are all great places to get an idea of what other comparable rentals in the area are going for during different months of the year. Also, look closely at which rentals are booked up, and which ones have more vacancies. Many online vacation rental booking sites have calendars that show you when a property has openings, and when it’s unavailable. A home that is mostly booked up by the start of summer is obviously doing something right –either it’s excellent marketing and/or is priced accordingly. Obviously, you want to emulate what that landlord/property manager is doing because it is clearly working. 

2. Determine rental costs Will you need to charge an extra cleaning fee, or build extra dollars into the rental rate to help cover monthly HOA fees? Or annual beach passes? Some landlords charge a fee for pets because the cost to clean up after is slightly higher. Also, give consideration to the added cost you have for providing a pool/hot tub/wifi, since there are increased monthly expenses that come with having those amenities.

3. Offer discounts Many vacation property owners find that offering deals helps to book up their rentals sooner. For example, you could offer a 10% discount for early bookings to a summer rental booked before March 1. By the same token, a 10% last-minute booking discount might fill an otherwise empty home from Friday-Sunday. There’s also an option to structure your rental fees so that a mid-week or partial-week rental would be less expensive for tenants, and therefore more appealing to those who don’t want a 7-day rental – which is required by many vacation property owners.

4. Not all seasons are created equal You also have to look at how you can structure your rental costs throughout the year. Some landlords could fetch double or triple the rental rates in July versus November. Also, a high-profile convention that occurs during an off-peak month could spell big profits if you position your rental properly. Again, you have to research the competition and local events to help determine what guests would be likely to pay for each week of the year.