Biggest Mistakes/Lessons Learned: Short-Term Rentals

99 Replies

Hey everyone!

My name is Melanie Stephens and I write the “Biggest Mistakes/Lessons Learned” column for BiggerPockets Wealth Magazine.

I am looking for BP Member stories for an upcoming column on Biggest Mistakes made in purchasing/renting/managing/selling Short-Term Rentals.

If you have a Short-Term Rental big mistake that has a great Lesson Learned for BP readers, I’d love to hear from you!

Please feel free to post here, DM, or email me with a few short details of your story and I'll get in touch with you if it looks like a good fit for the column.

Thank you!

Melanie Stephens

Originally posted by @Melanie Stephens :

Hey everyone!

My name is Melanie Stephens and I write the “Biggest Mistakes/Lessons Learned” column for BiggerPockets Wealth Magazine.

I am looking for BP Member stories for an upcoming column on Biggest Mistakes made in purchasing/renting/managing/selling Short-Term Rentals.

If you have a Short-Term Rental big mistake that has a great Lesson Learned for BP readers, I’d love to hear from you!

Please feel free to post here, DM, or email me with a few short details of your story and I'll get in touch with you if it looks like a good fit for the column.

Thank you!

Melanie Stephens

Yes! Trying to manage yourself, hire a cohost or get a property management company or at least hire someone to clean. 

@Melanie Stephens trying to fix the water heater myself.

I YouTubed it and realized it would be easy to replace the dip tube in my 15 year old water heater. Big mistake, the old dip tube fell into the tank and there was no way to add another one into the spot, so I put everything back together and attempted to isolate the tank with the valve in hopes that I could still get the water turned on to the rest of the house. Well, the isolation valve broke off instantly and sprung a leak leading me to shutting off the water to the whole house. I had to cancel 6 reservations but before I could block the date, new reservations would come in that very second. It was a nightmare, I had to call airbnb support to block off the dates and then paid 6k for a tankless heater which would take 3 days to get the parts. I would have purchased a cheaper water heater, though it was going to have to be retro fitted to the space for 3k and would take 5 days to get in to the shop. I needed water ASAP and bit the bullet, purchasing a tankless heater. Lessons learned, don’t fix things yourself when you have the place booked and not everything can be fixed using YouTube.

my biggest issue to date has involve cleaners. It's so vital to get a quality cleaner and vet them well. So far I have had two issues with guns in my property. One where the cleaner missed the gun that was left there, next guest found it and freaked out in the middle of the night demanding a refund and leaving.

Next issue with a gun, cleaners actually brought it with them. Put it in a dresser while they were cleaning and then left it behind. Decided to go back and bang on the door and say they live there to try and retrieve it. Needless to say, the girls renting it found the gun, had a random guy banging on the door and freaked out. Demanded a refund and called the cops.

I got lucky both times, no one was hurt, and I never got reported to airbnb, but I could have definitely been kicked off the platform. 

I've been doing real estate and lending for 40 years. By far the greatest mistake new, and not so new, investors make on all property types is paying too much. Unfortunately, most learn the hard way.

As both an Airbnb SuperHost of my own property and a former Airbnb property manager, the worst mistake I ever made was using my own funds to make expensive repairs when the property owner could not wire funds in time (and apparently did not have reserves). To this day they have not paid back $700 and subsequently sold the property while we still had reservations that I then had to cancel. I lost my SuperHost status and so then when I wanted to open my own Airbnb I had to contact Airbnb to open a new account. It was a huge lesson learned and now not only do I have sufficient reserves, I handle the money myself.

@Melanie Stephens the biggest mistake early on in my STR journey was dealing with unruly guests who damage the property, don't follow the rules, or leave your house a complete mess. As a host you should expect these things to happen, and we have both STR insurance and reserves allocated for these situations.

However, even though the financial aspect of unruly guests were covered, it was the emotional aspect that I wasn't prepared for. It's never fun receiving a call/text from your cleaning crew (or property manager if you have one of those) saying something is filthy or damaged beyond repair. I remember the first time I received one of these messages it felt like a personal slap in the face!

Needless to say I wasn't too kind in my messaging to the guest. Now that I look back, I wish I had handled the situation better and realized nobody is trying to damage my STR on purpose.

Granted, we all put our blood, sweat, and tears into acquiring, renovating, and maintaining an STR. But keeping a calm head when something goes wrong has certainly helped me maintain great reviews for my STRs!

My biggest mistakes were allowing one night stays on weekends, allowing locals to rent out my place, and not installing security cameras before going live on Airbnb. The result of these mistakes were...PARTIES that destroyed my properties. My biggest lesson learned as an STR property manager was that I didn't realize that by starting an STR property management business I was simultaneously starting my own cleaning business. I've had to become a pro at hiring my cleaners, training them, providing them with the most effective cleaning products and tools, creating the most efficient cleaning and organizing strategies customized to each property, training them on how to be my eyes and ears for the property, teaching them to keep inventory and help me restock all supplies, and let me know about needed repairs. I talk with my cleaners more than I talk with most of my friends. I've learned that they are most valuable asset in my STRs. You could have the most lavish STR imaginable, but if it isn't perfectly clean EVERY TIME then you'll get bad reviews that tank your listing and ROI.

Originally posted by @Matilda Donovan :

As both an Airbnb SuperHost of my own property and a former Airbnb property manager, the worst mistake I ever made was using my own funds to make expensive repairs when the property owner could not wire funds in time (and apparently did not have reserves). To this day they have not paid back $700 and subsequently sold the property while we still had reservations that I then had to cancel. I lost my SuperHost status and so then when I wanted to open my own Airbnb I had to contact Airbnb to open a new account. It was a huge lesson learned and now not only do I have sufficient reserves, I handle the money myself.

this happens to every PM who fronts rehab work and does not have control of the rents to drag it back out if owner wont pay.

some folks have been burnt so bad it put them out of business..  Thats why many top flight PM's require 1k to 3k in reserves to stay in THIER trust account and be replenished if used. 

@Joshua Carvalho I really like what you were saying about cleaners here. We live above our AirBnB unit and it has allowed us to get away with renting to locals since we have security cameras and change the lock code after every local guest that stays with us. The cameras are placed in a way where guests cannot miss it as it is right at the entrance. 

We had to fire our first cleaner due to a complete lack of integrity and poor/slow communication via text. Our current cleaner, we have had much more success with and found the personality of our cleaner to be a much better fit. She is close to our age (not necessary but helps in our case), communicates the way we do, and is very responsive to criticism. Although not mentioned as such, your cleaner might as well be your partner in the short term rental business!

I just want to say though that we avoided a lot of mistakes by reading the book Optimize your AirBnB by Daniel Rusteen before we started.

Biggest Mistake - I think our biggest mistake with our short term rental was taking so long to furnish it and not capturing business as quickly as we could after acquiring the property (leading to thousands of lost rents). We acquired our property in July of 2020 and did not get our listing active until February 2021. At the time, the supply chain to major furniture stores like IKEA was so backed up we could not order or purchase in store for the furniture we needed. Although inventory shortages due to COVID were not in our control, we could have ordered from other places like online retailers such as wayfair.com and waited the 1 to 2 months for shipping. Instead, we turned to local classifieds on Facebook marketplace to pick and choose pieces of furniture/décor, drove to the sellers location all over the city, paid cash for a lot of these pieces (which made accounting more difficult), and even hand-built and stained a coffee table, console table, dining table, and two side tables. Now that our unit has been producing a steady amount enough to pay our mortgage, we look back and must have lost at least 5 months of rents (approx. $12-15K) by taking so long. 

that's wild! yup! better call a professional! 

Originally posted by @Bryan Balducki :

@Melanie Stephens trying to fix the water heater myself.

I YouTubed it and realized it would be easy to replace the dip tube in my 15 year old water heater. Big mistake, the old dip tube fell into the tank and there was no way to add another one into the spot, so I put everything back together and attempted to isolate the tank with the valve in hopes that I could still get the water turned on to the rest of the house. Well, the isolation valve broke off instantly and sprung a leak leading me to shutting off the water to the whole house. I had to cancel 6 reservations but before I could block the date, new reservations would come in that very second. It was a nightmare, I had to call airbnb support to block off the dates and then paid 6k for a tankless heater which would take 3 days to get the parts. I would have purchased a cheaper water heater, though it was going to have to be retro fitted to the space for 3k and would take 5 days to get in to the shop. I needed water ASAP and bit the bullet, purchasing a tankless heater. Lessons learned, don’t fix things yourself when you have the place booked and not everything can be fixed using YouTube.

The main topics that come to mind immediately are the need for electronic or smart locks, dynamic pricing tools, how to screen guests, and how to write house rules so that everyone knows what is expected of them. 

My big mistake recently was not replacing the batteries in my smart lock. The guest called me at 10 p.m. because the lock wouldn't open. I had to go over there and let them in through the garage, because I didn't even know where my front door key was that house. It was a violation of their privacy, and I was so embarrassed. Now it's on the calendar to have the batteries replaced every 4 months, and there are keys in a lockbox on site just in case! 

We learned a ton from other hosts and investors before we launched, and now that we are well down the short-term rental road, there is no doubt that certain bits of advice were more valuable than others. We’ve certainly made minor mistakes, but I’m grateful to say that we benefited greatly from the wisdom of those who went before us.  So, while some of this may not fit the “lessons learned by messing up” box, what I CAN do is pay it forward by summarizing the most helpful advice and lessons “confirmed” that have led to our success.  

So, for what it’s worth…

1) Location, location, location.  What is nearby that attracts visitors?  Is it seasonal or year-round?  Does it attract families or parties?

2) Do your own research.  Airdna and Mashvisor are great, but they’re not perfect.  Better to watch similar properties for a while on Airbnb and VRBO, AND ask a realtor about returns, AND do the research on sites like Airdna and Mashvisor.  The combination of data will yield the best analysis.

3) Gather as much data as possible for an informed buying decision, but make the leap—thorough analysis, but not analysis paralysis.

4) When setting up a property, consider things that will get people to book AND little surprises that will make them happy once they’re there.  Touches like good linens, a plush mattress topper, labels and instructions for where to find or how to use things, or great coffee go a long way towards a 5-star review.


5) Speaking of reviews, educate guests on the review system.  Our check-in email tells guests that many platforms consider anything less than a 5-star review to be an unsatisfied guest.  As such, we tell them appreciate the opportunity to correct a situation during the stay rather than finding out about it afterwards.  Nearly all guests give us that opportunity if there’s a problem that surfaces during their stay, and our average rating on Airbnb is 4.97.


6) Stay at your property before it goes active and periodically once it’s up and running.  You may not realize the can opener broke or that the lamp light bulb is blown unless you spend some time there.

7) Don’t get too emotionally attached to the property.  If you do, you may over-invest in things that don’t add value (wasting money on things that don’t give you a return is never a good idea), overreact to damages or things getting ruined (budget for those things to happen, buy duplicates, and then don’t give damages and ruined items another thought!), worry all the time, or be too protective of who you allow to stay (though screening is good, a fully occupied and highly profitable property may be worth very small risks—for each person to determine based upon risk tolerance, but we have very few bad guests). 

8) Stating the obvious, but find ways to increase revenue.  Definitely use an external pricing tool like Pricelabs, consider allowing pets with a fee (an extra $5-8k per year just might make the cost of that new rug more palatable—and it’s unlikely you’ll need one since most pet owners take care of the place), and consider one-night stays if the guests are properly screened.

9) Others will disagree and perhaps location has a part to play in areas that are and are not desirable for partying, but to elaborate on the last item above: one-night stays (between other guests) add about $10k NET to my annual bottom line.  Don’t do single nights for locals, but DO consider them for the family of 4 that’s coming to town for a quick getaway or event.

10) Differentiate your property from the rest.  It may be through nicer furnishings, adding a hot tub or pool table, or accepting pets.  All of the above items can help create a niche, which particularly helps you stay booked during the off season.

11) Go for durability in choosing furniture and linens, and replace/service things sooner/more often than you would in your own home.  A broken appliance could cost you more in frustrated guests, rental concessions, and property downtime than replacing it a bit more frequently.

12) Automate everything—bookings, confirmations, check-in emails with door codes, check-out reminders, etc.  Everything!  If you’re spending more than 20-30 minutes a WEEK managing a single STVR, then something in the process needs to be changed.  Pricelabs, Hospitable, and a channel manager like Ownerrez or Lodgify are essentials.

13) Fear of a bad review can cause you to expect too little from your guests and to take on too much stress when something goes wrong.  Provide a great (even if sometimes imperfect) experience, and most guests will leave a great review. 


14) By the same token, don’t be difficult with your guests!  We’re in the hospitality/service industry. If you don’t like that, then don’t buy a STVR!  I’m often stunned at how hosts respond to problems/issues posted by another host seeking advice on social media (thankfully, Bigger Pockets hosts seem to have more class!).  You’re going to have an occasional needy guest, difficult request, or unexpected cancellation that falls outside of your policies.  Do your best to be flexible and serve your guests well.

15) Find an outstanding property cleaner/care-taker and treat him/her well!  This person is the key to your success, having few headaches, attracting repeat visitors, and ensuring that guests have an overall great experience.  Your cleaners may not put things in the same places you would, and there may be an occasional miss.  Let these things go!  If they’re committed, dependable, keep things clean and stocked well, and willing to do everything you need, then it is golden!

16) Be good neighbors.  Many HOAs and local governments no longer allow STVRs.  Buy somewhere that has already fought those battles (i.e. where you already know the rules of the game—not where the rules are yet to be created) and then meet the people around your property.  Give them your contact information in case neighbors have problems with your guests, and assure them that you’re there to serve them as well as your guests.

As I have seen on other posts my experience has been similar- I ran a single one bed one bath STR (easy right?) NOT. I tried to do the cleaning all myself in the beginning to save as much as I could. Working a full-time 9am-6pm job it made my days long and undesirable to get off work then go clean my property for 1.5 hours. After a few months of struggling with this I decided to find a cleaner. During COVID my reservations were scarce and all professional cleaners were out of my price range and charged more that I was able to pay in order to stay cash positive.

What I ended up doing was reaching out to locals and found a young high school student who I would supply my cleaning items and I would pay them $40 per clean. It ended up being an OKAY fix because towards the end when school started and their sports picked up their schedule became full and I began sharing the weight load again. I would urge people when running numbers to put emphasis on incorporating the cleaning fee and in their numbers making sure it is accurate for your area and property size.

Originally posted by @Robert M. :

We learned a ton from other hosts and investors before we launched, and now that we are well down the short-term rental road, there is no doubt that certain bits of advice were more valuable than others. We’ve certainly made minor mistakes, but I’m grateful to say that we benefited greatly from the wisdom of those who went before us.  So, while some of this may not fit the “lessons learned by messing up” box, what I CAN do is pay it forward by summarizing the most helpful advice and lessons “confirmed” that have led to our success.  

So, for what it’s worth…

1) Location, location, location.  What is nearby that attracts visitors?  Is it seasonal or year-round?  Does it attract families or parties?

2) Do your own research.  Airdna and Mashvisor are great, but they’re not perfect.  Better to watch similar properties for a while on Airbnb and VRBO, AND ask a realtor about returns, AND do the research on sites like Airdna and Mashvisor.  The combination of data will yield the best analysis.

3) Gather as much data as possible for an informed buying decision, but make the leap—thorough analysis, but not analysis paralysis.

4) When setting up a property, consider things that will get people to book AND little surprises that will make them happy once they’re there.  Touches like good linens, a plush mattress topper, labels and instructions for where to find or how to use things, or great coffee go a long way towards a 5-star review.


5) Speaking of reviews, educate guests on the review system.  Our check-in email tells guests that many platforms consider anything less than a 5-star review to be an unsatisfied guest.  As such, we tell them appreciate the opportunity to correct a situation during the stay rather than finding out about it afterwards.  Nearly all guests give us that opportunity if there’s a problem that surfaces during their stay, and our average rating on Airbnb is 4.97.


6) Stay at your property before it goes active and periodically once it’s up and running.  You may not realize the can opener broke or that the lamp light bulb is blown unless you spend some time there.

7) Don’t get too emotionally attached to the property.  If you do, you may over-invest in things that don’t add value (wasting money on things that don’t give you a return is never a good idea), overreact to damages or things getting ruined (budget for those things to happen, buy duplicates, and then don’t give damages and ruined items another thought!), worry all the time, or be too protective of who you allow to stay (though screening is good, a fully occupied and highly profitable property may be worth very small risks—for each person to determine based upon risk tolerance, but we have very few bad guests). 

8) Stating the obvious, but find ways to increase revenue.  Definitely use an external pricing tool like Pricelabs, consider allowing pets with a fee (an extra $5-8k per year just might make the cost of that new rug more palatable—and it’s unlikely you’ll need one since most pet owners take care of the place), and consider one-night stays if the guests are properly screened.

9) Others will disagree and perhaps location has a part to play in areas that are and are not desirable for partying, but to elaborate on the last item above: one-night stays (between other guests) add about $10k NET to my annual bottom line.  Don’t do single nights for locals, but DO consider them for the family of 4 that’s coming to town for a quick getaway or event.

10) Differentiate your property from the rest.  It may be through nicer furnishings, adding a hot tub or pool table, or accepting pets.  All of the above items can help create a niche, which particularly helps you stay booked during the off season.

11) Go for durability in choosing furniture and linens, and replace/service things sooner/more often than you would in your own home.  A broken appliance could cost you more in frustrated guests, rental concessions, and property downtime than replacing it a bit more frequently.

12) Automate everything—bookings, confirmations, check-in emails with door codes, check-out reminders, etc.  Everything!  If you’re spending more than 20-30 minutes a WEEK managing a single STVR, then something in the process needs to be changed.  Pricelabs, Hospitable, and a channel manager like Ownerrez or Lodgify are essentials.

13) Fear of a bad review can cause you to expect too little from your guests and to take on too much stress when something goes wrong.  Provide a great (even if sometimes imperfect) experience, and most guests will leave a great review. 


14) By the same token, don’t be difficult with your guests!  We’re in the hospitality/service industry. If you don’t like that, then don’t buy a STVR!  I’m often stunned at how hosts respond to problems/issues posted by another host seeking advice on social media (thankfully, Bigger Pockets hosts seem to have more class!).  You’re going to have an occasional needy guest, difficult request, or unexpected cancellation that falls outside of your policies.  Do your best to be flexible and serve your guests well.

15) Find an outstanding property cleaner/care-taker and treat him/her well!  This person is the key to your success, having few headaches, attracting repeat visitors, and ensuring that guests have an overall great experience.  Your cleaners may not put things in the same places you would, and there may be an occasional miss.  Let these things go!  If they’re committed, dependable, keep things clean and stocked well, and willing to do everything you need, then it is golden!

16) Be good neighbors.  Many HOAs and local governments no longer allow STVRs.  Buy somewhere that has already fought those battles (i.e. where you already know the rules of the game—not where the rules are yet to be created) and then meet the people around your property.  Give them your contact information in case neighbors have problems with your guests, and assure them that you’re there to serve them as well as your guests.

Robert, this is gold!

Thank you,

John

Obtain additional liability insurance on top of what Airbnb offers (if that's the platform you're using). I can't speak for the other STR platforms but it gives you some additional peace of mind knowing you have some coverage. I've reached out to Airbnb about issues and they aren't very good at addressing issues in many cases. Additionally, make your listing very clear and add any house rules you think will help back yourself up if a guest violates it. For example: "no photoshoots where multiple people are coming and going from the space". Otherwise, people will abuse your space and if you didn't say they couldn't do it, Airbnb won't back you up.

Like someone else mentioned, educating the guests on the review system is crucial. Otherwise, people will leave you a poor rating for rather minor issues. Basically, we put up a guide next to the door so they can review it on the way out. 5 stars means they were happy even though perfection does not exist. 1 star means the hosts need to be thrown in jail immediately. Most will realize that something like "wish we had a couple more hand towels" is still worth a 5-star review.

Originally posted by @Mike Shulman :

my biggest issue to date has involve cleaners. It's so vital to get a quality cleaner and vet them well. So far I have had two issues with guns in my property. One where the cleaner missed the gun that was left there, next guest found it and freaked out in the middle of the night demanding a refund and leaving.

Next issue with a gun, cleaners actually brought it with them. Put it in a dresser while they were cleaning and then left it behind. Decided to go back and bang on the door and say they live there to try and retrieve it. Needless to say, the girls renting it found the gun, had a random guy banging on the door and freaked out. Demanded a refund and called the cops.

I got lucky both times, no one was hurt, and I never got reported to airbnb, but I could have definitely been kicked off the platform. 

 Florida man.

I cannot count the number of mistakes I’ve made and I’m not sure there is one that is bigger than another so I’ll just list a few that are particularly salient: 

  • Cleaners are the lifeblood of your business. Know that you’ll struggle through a few that bad ones before landing on one that’s great. Once you find her/him, treat them like the partner in your business they are… or just outsource to someone else that does. 
  • Ask for reviews and when you do offer an alternative channel for negative feedback. Don’t assume guests know the differences between AirBnB’s private vs public review feedback, educate them. 
  • Ratings are everything in your first few few weeks/months. Plan on renting out at 50-60% of your ADR until you’ve established credibility by accumulated at least a half dozen 5 star reviews. 
  • Never auto-review. I know this is a part of the “automate everything” religion and it is also a part of the what makes AirBnB suck more than it should by rating awful guests great. It makes you part of a big problem and ultimately cripples your ability to protect your property from the downside risk of ReallyBadGuests®. 
  • Don’t wait for guests to tell you your check-in/towels/kitchen supplies suck. Invest the time understanding what really great hospitality XPs look and feel like before you begin. If you’re a Holiday Inner, book a Westin. If you normally self-check-in, have a chat with a hotel concierge. Understand what great hospitality looks like before assuming you know. Save photos of places and spaces you’ve traveled where those guest XPs really kicked ***. Remember those XPs when designing your own spaces as well. 
  • Most importantly: never, ever, ever use base line Scott TP that's so thin you can see through it and falls apart in guests' hands at exactly the moment in their life when they need a soft, strong wall of anything because it's $.50/roll cheaper than AngelSoft for you. You may think you're an P&L rockstar for saving $53/year on your STR op-ex. Guests will just think you're a cheap-*** and roll out 4x more TP than than Rapunzel on a skyscraper, then rate the value of your rental down anyway.

I could write a book on mistakes like these (and probably will someday), but for now I just hope this helps owners navigate some of the more common assumptions that catch new STR owners by surprise thinking they are doing the right thing. What works in LTRs does not always translate to STRs.

Don't underprice your STR. Lowballing to land deals can often attract those who will not take care of your place. If you provide a clean and nice place, you can command a higher price that's deserved and attract guests who will treat it properly.

Also, don't over-amenitize (I don't think that's a real word).  We started by having all sort of "extras" that we thought would add to the guest experience, but what we found was the oppositie.  Too many things to replinish, things that could go wrong, never satisfying guests, etc.  So we went with a clean place with the basic essentials and its worked wonders.