6 Steps for Successfully Investing in Vacation Rentals
There’s just something about summer. No matter where you are or what you do, summer brings out an excitement that’s just a step or two below the thrill of the holiday season. Memories of summer vacation, swimming pools, ice cream trucks and care-free days always stick with us, even into adulthood. No matter how old I get, I still love packing the car and heading to the beach.
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Two years ago, I headed out on a two day trek from Memphis to Cape Cod to spend some time on a beach I had never visited. That had to be the most grueling two days I have spent in a long time, but was so worth it as we pulled up to a summer cottage right on the water. Yes, even with 5 kids in tow and regardless of the distance, I am always smiling at the end of that drive to the beach.
Summer also brings out unique opportunities for real estate investors. While many of us involve ourselves in single-family rentals or apartments, there are ways to branch out that, for whatever reason, we don't always take advantage of. I am in the middle of putting together a vacation rental as we speak and my family is now operating two others.
Investing in vacation rentals is certainly a different beast. It’s not at all like a regular investment — stays are shorts, seasons matter, and marketing is absolutely king. The ‘wow’ factor starts the second someone inquires about your property and lasts through the time they check out. Your task is to figure out how to wow them from start and keep them in awe so they tell everyone else how great the experience is at your property.
If you’re considering investing in vacation homes, there are a few keys to remember.
Summer Lovin’: What You Should Know About Vacation Rentals
1. Your marketing matters.
Marketing is always important in matters of real estate, but it’s especially true for vacation properties. Highlight your assets. Craft a stellar description, but make sure it is accurate. Invest in high-quality, professional photography that really highlights the uniqueness of your property.
More important than setting up a good listing, however, is ensuring that it’s effective. Look at the data, track analytics. Are people finding your listing? How much attention are they giving it? Just like any other listing, you’ll need to keep it updated and in line with what people are looking for.
Lastly, don’t shy away from telling people how they are going to be treated by you. Believe me, there are plenty of places to stay where the owner does not care about the experience of the renter. Highlight that you are not one of them!
2. Only the best customer service will do.
Customer service for a vacation rental isn’t just about having top-notch property maintenance and responsiveness to your customers. It’s also about answering any inquiries that come your way and responding even when your property is booked. When people receive a response, they’ll be more likely to try again at another point. Let them know what is available (if anything) and encourage them to check back another time.
Wow them when they walk through the door by leaving a unique gift for each booking. Something local for them to remember you by and possibly even a few personal touches like recommendations for fun things to do close by with kids. Every little touch you can give counts and only heightens their experience in your property.
3. You’re selling an experience.
For residential rentals, you’re not selling a dream. You’re selling a home. Your tenants don’t need it to be ideal. On vacation? It needs to be ideal.
That means painting a picture in your listings that entices readers and delivers the well-maintained property that people want to spend their vacation living in. It’s not a necessity — it’s for pleasure. Because of that, you have to approach your strategy with an entirely different mindset.
It absolutely matters that your property is spotless when a new renter arrives. It matters that there is a gift waiting for them to make them happy. It matters that they know you are looking out for their best interest and want them to have a comfortable and fun time at your property. This is what earns you high marks on the reviews and not only repeat customers, but high praise from those customers to their family and friends (referrals are important)!
4. Be competitive in your market.
Your renters have absolutely looked at other vacation properties in the area. Make sure you know your market and are offering a competitive price. Because of seasonal use and a higher yearly vacancy rate, you may be tempted to up the cost. Don’t. Focus on being competitive and delivering the value to your customers.
Price is very important, but so is occupancy and word of mouth. When someone feels that they received a high level of service and value for the price they paid, you can bet others are going to hear about it. Staying booked definitely helps cure the competitive pricing.
5. A professional image lends confidence.
Being professional is always important. As we’ve talked about before, there are a lot of vacation rental scams out there. Avoid suspicion by being responsive, providing formal contracts and using a professional booking system. The more thorough, organized and communicative you are, the more renters will trust you. The more detailed your listing and the better your pictures are, the more professional your image will appear.
Remember, all of these small details matter.
6. Quality comes first.
On the note of selling an experience, value upkeep. There’s nothing sadder than a run-down vacation home. Ensure that the place is thoroughly cleaned between each renter and be diligent in finding and addressing any maintenance issue. People are far, far less forgiving of a vacation rental than they are of other properties.
What do you think is most important about owning a vacation rental property? Share your opinion in the comments.