Biggest Mistakes/Lessons Learned: Short-Term Rentals

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Hi Everyone!

Interesting post subject Melanie. I have been out of the BP community for quite some time and It was nice to see a subject post related to my industry.

We were the first real estate brokerage to embrace and support short-term rental under the sharing economy in South Florida back in 2013 when Airbnb was getting hot and the business ecosystem surrounding Airbnb started to pop out. Things changed a lot since that time and took us to new ventures and today we are one of the promising Miami - Florida startups with a unique technology that connects the properties in multi-channels, and residents with vetted local service providers automating the administration of short-term rental and hospitality services.

During those past eight years in the short-term rental business, I have many mistakes and lessons to share but the biggest tip is to know your local short-term rental regulations and that the market is very competitive today, different than five years ago and without technology or professional people behind it you will work a lot risking make less income than if you had a regular yearly tenant.

Cheers and I wish everyone success!

great great comments by everyone. newer to the str but definitely learning as i grow that side of things.

one mistake is not attending to things right away and assuming guest have common sense. lay the rules out and make sure your listings are accurate. have a system in place to make sure supplies are covered and cleaning is key.

provide a great product and you will get great guest. dont go cheap route as end of day it is only hurting you.

Originally posted by @Himmler Joachim :

I just started subletting my second room in NYC a month ago. I was also able to find a short term lease contract last minute online. Better than nothing. 

 Do you think when prospective renters learn your name--in New York--it cuts down on those who would rent from you (A serious question)...(???)

I've made many mistakes with my STRs.  The largest I made was choosing a property as a master lease that did not have adequate duct work to the second floor.  When the heat of summer hit, the central air did nothing to keep the upstairs cool and it resulted in poor reviews.  I ran and bought three window A/C units, however the electrical outlets were in poor positions so extension cords were everywhere.  All around, I should have been more diligent on checking these things. 

There are several mistakes I see the other hosts doing in any location... 

1. Don't take your own pictures.  Hire a professional photographer!  

2. Don't have the spaces entirely sparse, or too packed with items. It won't rent well if it looks like it's all cast-off old furniture.  Let the place have some design and fun. 

3. Don't go bare bones, especially in the kitchen...Seriously, one of the constant top raves about my STRs is that the kitchen is completely stocked. Don't go cheap here. Provide things like colanders, mixing bowls, spices, salt/pepper, napkins, knife set, cutting boards, measure cups, spoons, blender, wine glasses, wine opener, pizza cutter, etc. Include a basket with coffee, tea, sugar and creamer. Attention to detail gets lots of attention. 

Another person mentioned it and I agree completely. Spend the night in your own STR. You will discover the areas that need improvement.

My biggest mistake.. and learning experience has been very simple - tech and systems automation.

I have remotely managed my personal Airbnb's for 2yrs from my phone and spend a lot of time traveling. 

What I learned the hard way is how to prevent a house party using tech. I use Ring as the security system for my properties and I have it set-up to alert my phone when there is high traffic coming onto the property. However, during one guest experience this system failed me. I overlooked a very small but large issue - the front door Ring would randomly turn off!!  I had no idea why but thought, oh it will turn back on.. it's no big deal! I was wrong. Not long after I noticed this issue, a guest checking-in for a wedding actually checked in to host a 30th birthday party with 30 of her closest friends - yikes! And you know what, I had no idea this was going on because the front door Ring that day was turned off! Had it been on, I would have caught the activity right away and saved myself over a $1k in damages. The side learning is Airbnb's host guarantee only covers your claim if it's reported and all itemized damages are sent to Airbnb before the next guest checks-in. Even if there is documentation with pictures and video. I had a same-day check-in the day of the party check-out. I had the cleaning team focus on turning the house so we could take care of the next incoming guest and not cancel their reservation due to the house being a wreck. This was our #1 priority before submitting the claim. By salvaging the next reservation, it cost me $1k in damages because the claim was submitted too late. 

What I learned is... just call an electrician to check out what's going on! I did this after the fact and learned the Ring was turning on and off with the flip of a light switch. It was a simple fix that cost roughly $100 to solve. Lesson learned :)

The second learning is, write down your systems and automate it! 

For example... I have pre-stay information, house guides and local restaurant/things-to-do lists that I packaged up and email out to each guest. This used to be sent as a one-off in Airbnb's messenger. However, in an Airbnb message, posts are unformatted and this jumbled up the content and made it hard to read. I now place all this info into separate PDF's and send it directly to each guest. It's comes across as a more personalized note and also saves a ton of time answering the same questions over and over. Plus, guests mention it in the reviews. It's my #1 tip for improving the guest experience!

I think the biggest mistake I've learned in buying STR is being too emotionally attached to wanting a vacation rental without actually running the numbers from an investment perspective. We really wanted that ski cabin for personal use, but the numbers really didn't pan out positively when reality set in and we only used it once a year turning into a bad investment. We were much better off just renting on VRBO or AIRBNB and investing that capital elsewhere.

Also, not fully knowing how much management charged in the beginning to accurately run numbers for ski cabins.  We are at 50% mgnt with cleaning which is quite dramatic making it hard to be positive cash flow.  I will say it's probably appreciated a fair amount.

Talk to property managers and other STR owners. I nearly bought several properties that I would have regretted. Stay away from HOA's if you want flexibility. Learn the market demands like a pool, parking for toys....