Just Launched Our First Vacation Rental Property

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A while back, my wife and I decided to rehab one of our long-term rentals in central Austin and convert it to a short-term vacation rental. After months and months of work, our first vacation rental property is now up and running! 

VRBO Listing #685434

We've had two parties stay with us so far, and both have left sparkling reviews. And we've got a couple bookings for South by Southwest next week. We're looking forward to settling into our new roles in the hospitality industry (we're self-managing), and tweaking amenities/rates to generate maximum revenue from the property going forward. Exciting stuff!

That is a big market to target. Also in between, you could possible do Air bnb rentals as well to keep a steady and constant income. Were definitely thinking about utilizing mobile homes for that purpose.

Looks good Gary.

Which marketing package did you choose?

We're using the Homeaway/VRBO platinum package for our properties in Austin. It's not cheap ($1250 per year per property), but it only takes one good booking to pay for it. 

We are up to 4 units in Austin and adding a 5th unit next month. Too bad we couldn't close it and get it ready prior to SXSW. That's the biggest event of the year in Austin.

Would love to know how your numbers shake out for the year.

Thanks everyone for the kind words!

@Davon Lowery  We don't have much data yet, but we're certainly expecting a seasonal flux. We expect a dropoff from mid June through the end of August, when the weather is often 100+ degrees and there aren't many marquee events in Austin. We've got our rates set lower during times where there isn't a big event. And I've noticed that the boutique hotels in town lower their rates a bit in mid summer to encourage more bookings. We'll probably follow suit. 

@Jon Klaus  I did purposely set the rates a bit lower than our closest competitors, to encourage more bookings and get more reviews. Once we've got some traction, I plan to experiment with raising rates. We've focused on putting a really nice product out there, so I'm confident that the property can support higher rates. 

The City of Austin requires the operator of a short term rental to get a Short Term Rental License, which entails submitting application paperwork, paying a $285 application fee and having a certificate of occupancy or an inspection by a certified inspector. One also needs to collect City of Austin and State of Texas hotel taxes, which total 15%. Payment of these taxes is due quarterly, and one must file reports via the respective entities' websites. 

@Scott Sutherland  I took your advice and went with the VRBO/HomeAway Platinum package. :) It seems they've raised the Platinum package rate from $1000 to $1250. And it was another $300 for the add-on that also gets your listing on HomeAway. I wasn't happy about the $1550 cost - but the exposure has been worth it. We are at a 90% quality rating (the average listing is 75%) and we've gotten bookings from both VRBO and HomeAway. 

Congrats on your 5th unit! We're already scheming about turning our other long-term rental (which is 3 minutes away from this one) into an STR. Will keep you posted on our data as the year progresses.

Congrats!

Reviews can sometimes be hard to get and they will help a good bit with advertising especially on a new property. Consider some sort of incentive to get visitors to leave a review if they start dwindling.

Gary, how is the rental doing?  Great looking place. We are is San Antonio and  we will be looking up your place  next time we go to Austin. 

We will be starting an air bnb in San Antonio, any advice?

Thanks

@Gary Ennis

nice job! I have been contemplating entering the vacation rental business as well. I got a new listing that I feel would be perfect for a VRBO. That seems to be a very popular method of investing in SW Florida. Do the companies take any cut of your income or just charge the annual fee?

John The beauty of VRBO is that they only charge the annual fee. We have had great success using VRBO for our unit in Heritage Bay. #567068 Would definitely recommend it. Jeff

@Naeem Kapasi Thanks for the kind words!

@Jon Klaus Occupancy rate was 70% for April, 55% for May, 50% for June, and 84% for July. 66% overall for the 4 months. 

We're happy with what we've been able to accomplish thus far, but we're also optimistic that we can raise occupancy rates significantly, primarily by building our own website (instead of relying 100% upon the listing sites), and starting an email marketing campaign to former guests/prospects.

Surprises thus far:
- At least in Austin, which is a 12-month rental market, the term "vacation rental" is a bit of a misnomer. "Short-term rental" is a more appropriate description, as we've had a significant number of guests who stayed with us because they were moving to Austin and their house wasn't quite ready, they were doing renovations to their house and needed a place to park their family for a few days, their child was graduating from UT, they were helping a family member move to Austin, etc.
- May and June were slow months. I would have thought that July and August, when it's very hot here and there's nice summer weather in the rest of the country, would be the slowest. But folks who are moving here who need temporary housing tend to move in the summer when kids are out of school, and there is quite a lot of activity around UT in August. 
- That we'd love being in the hospitality industry as much as we do. Being vacation rental owners enables my wife and I to combine our love of taking distressed properties and making them better, design (you've got to furnish and decorate the place to create an inviting "guest experience") and hospitality. We're very interested in the idea of managing others' Austin vacation rental properties for them, in addition to ours. 

Reinli St - wow! We are currently rehabbing our house on Broadview about three blocks away, which will become our second vacation rental property when it launches in late August. Is the property a commercial building? As far as I know there's only one little house left on Reinli; the rest are apartments or office space. 

@John Thedford As @Jeffrey Cervi mentioned, VRBO/HomeAway charges an annual fee, and does not take a cut of individual bookings. I highly recommend joining at their Platinum level; it's pricey at $1550 for membership that includes both VRBO and HomeAway and many of their other sites, but membership level is the #1 factor in determining your placement in their search results. Thus far we are getting the most reservations from VRBO/HomeAway, although we are gaining significant traction with AirBnB lately. 

AirBnB and FlipKey don't charge a membership fee, but take 3% of each booking.

Dwellable is another site we're experimenting with. They are a startup and don't have much traffic yet. But they are optimized for mobile (which is how many millenials are searching for VR properties) and optimized for large, beautiful photos. 

@Maura Paler Thanks! We'd love to host you guys for a future trip to Austin. If you have any questions about Austin, feel free to message me. 

@Gary Ennis

if I may ask what was your purchase price? The one I am considering is 300K, would need about 10K in minor rehab. Taxes would be VERY high...probably in the $6000 range. If I set it up as VRBO we would have all the usual, taxes, insurance, maintenance, electric, yard, pool care, etc.  I suspect if we listed with a company that manages VRBO that their cut would make a HUGE difference in our net profit.

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