Biggest Mistakes/Lessons Learned: Short-Term Rentals
Melanie StephensPro Member
Investor · Tabernash, CO · Member since 2012 · 11 posts · 237 votesBiggest Mistakes/Lessons Learned: Short-Term Rentals
Most Popular Reply
Member since 2019 · 43 posts · 141 votes
5yWe 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.
123 Replies
- 4yShane SiedermanPro MemberInvestor · Charleston, SC · Member since 2015 · 39 posts · 17 votes
That might true once a while, I read article in Austin texas judge ruled against the big powerful hotels and said unfair to owner of their homes should be able to do what they want within reason. Its destroying hotels, uber destroying cabs, goggles destroying newspapers> Bottom line freedom usually prevails and your home, buildings is yours, therefore laws side with owns more and more.
FYI alcohol was illegal in some cities, gambling too, this nothing so bad and its the owners place should be aloud to do what feeds your family. LOL this modern day prohibition much smaller hurdles.......
- Member since 2021 · 16 posts · 18 votes4y
@Shane Siederman listen I'm all for freedom but remember that whether you or I or anyone else have our definitions of freedom the government/municipalities have theirs and they will come after you if you don't abide by it. Personally I agree with you we should be free to rent our properties however we see fit. So if you decide your best course of action is to go toe to toe with a town or city over your "right" to rent your property how you see fit that's your prerogative. If you own in a big city you probably have enough firepower from other large scale owners to have a chance but in smaller areas you may not. Check out some of the regulations on short term rentals in Santa Monica, Sarasota County FL, Jersey City NJ, or Clearwater FL to name a few, each one has different regulations but they all make it tougher. Do I agree with them? No. But to hang your hat on "freedom always wins out" probably doesn't work out in the favor of many of these short term owners.
Also, I see your from Charleston which is an amazing city where you can do about anything you want but you do realize that there are still cities and towns in this country where gambling and alcohol are illegal right?
- 4yShane SiedermanPro MemberInvestor · Charleston, SC · Member since 2015 · 39 posts · 17 votes
My friend I'm from NYC own properties in multiple states and agree with you. Charleston believe or not is a ***** to work inside of. Politicians are all criminals they work for special interest, mark my words one city's says no another says yes.... Mask no mask, abortion and anti abortion. I'm with my friends a lot them are lawyers, most them real estate or corporate and it will come down to many and states enforcing what we bother cosdier BS, will lose business to the other state or city. As Trump realize he couldn't control Cumo, Biden cannot control the red states. SC is killing NC it cities where mask mandates are over the top. Florida liberal city will suffer but the business people will move to area with flexibility. As NYC and California lost millionaires left and right. California lost Elon Musk, Apple executives, Larry Ellison or Oracle so many companies moved OUT 47 just inside of 36 months thats a FACT. This amazing NYC lost so many it's scary. We most likely agree on a lot, bottom line I track money a lot follow companies and wealth moving around.
- example Starwood capital moved from CT to Florida
-Greystar another monster moved to South Carolina
-Blue Rock
-Jamie Dimon having trouble keep his best bankers inside NYC- most jumped ship and inside Florida
FYI Uhaul, ryder trucks and many reatla companies provide information who's moving
where...
I don't disagree with you, just follow things slightly different try money, I'm dyslexic so if my english sloppy I apologize Kindly.....
Thanks for your insight!!
- 4yShane SiedermanPro MemberInvestor · Charleston, SC · Member since 2015 · 39 posts · 17 votes
there are now 70 billionaires in Florida, worth a combined $245 billion.Apr 6, 2021 Inside Forbes article saying why they moved to FLORIDA, A GOOD CHUNK LIKE THERE MONEY MORE THAN THERE PARTY. BOTTOM line they like lower taxes and other benefits in sunshine states article pointed safer taxes and ability to protect their wealth. Just facts the new world will be RED VS BLUE, blue states losing biggest money makers.... This isn't even big tech companies who ran to TEXAS..... too!!
- Member since 2021 · 16 posts · 18 votes4y
@Shane Siederman oh I 100% agree with you. I personally moved back to FL from New Canaan CT a couple months ago. The point of my original post was more to give people some advice for potential road blocks that may occur with short term rentals. But you make a very good point about following the money… the more government imposed red tape, regulations, and taxes the less enticing it is for investors. And as much as it blows following the money will often times identify trends like large corporations with millions in lobbying dollars (like the hotel/hospitality industry) trying to stronger arm municipalities and politicians into imposing silly regulations on small time investors. Either way never hurts to have a backup plan.
- 4yShane SiedermanPro MemberInvestor · Charleston, SC · Member since 2015 · 39 posts · 17 votes
110% u are right and that's where Charleston wins MUSC and CHC....
- Lender · Lakeland, FL · Member since 2020 · 59 posts · 23 votes4y
Biggest learned mistake is paying/researching for quality cleaners. We had started out doing the cleaning ourselves because we didn't mind and the little extra cash from doing the cleaning ourselves made it fun. But when we got to 3 units it wasn't really worth the constant working at the point. So we hired a cleaning company that said they would meet all of our needs and we went through the whole process of telling them what we wanted and how we wanted it done. They promised us the world but delivered very sad services. We ended up having to walk through to double check their work every time and almost got to the point we were doing half the work ourselves it seemed like. So we researched another company, interviewed them and walked them through the properties. Surprisingly the owner came and walked his entire crew through each one of the properties with us. The owner came to the properties almost every time the first few weeks they started to make sure they were doing everything like we asked! It was incredible! We eventually grew a personal relationship with them and we absolutely love their services and are talking with the owners on how they can get their first short term rental. My advice is spend the extra dollar, do the extra research, because in the end you're going to anyway.
- Member since 2021 · 2 posts · 1 vote4y
Some people are just really trashy. One time we found kitty litter on the floors in a house where we specifically don't allow pets..
- 4yShane SiedermanPro MemberInvestor · Charleston, SC · Member since 2015 · 39 posts · 17 votes
ring.com helps just disclose outside give u insight...
- Real Estate Agent · Bentonville AR · Member since 2019 · 12 posts · 7 votes4y
Originally posted by @Joseph Bafia:
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.
Came here to say the same thing! I started using an Airbnb pricing tool (pricelabs) and it has helped me from day 1. Totally worth the $20 monthly fee. I realized I've been pricing my property too low - which in turn means lost revenue. On top of this, pricing your STR too low also cost you in tenant quality. Since I've raised my prices, I've had really great guests who can take care of the property, and always keep it clean, and are super considerate. I'd deeeefinitely recommend to anyone who's doing this on their own.
- 4yMarc RiceBusiness MemberReal Estate Agent · Columbus Cleveland Dayton, OH · Member since 2018 · 2k+ posts · 1k+ votes
My biggest mistake was focusing so much on management and arbitrage instead of buying the properties and managing myself. I am now correcting my actions by buying property and managing less for others.
Marc Rice | Investor Friendly Agent at Reafco Tailwind Team574 Reviews - Member since 2021 · 2 posts · 1 vote4y
Hey Everybody,
The biggest mistake I made on a short term rental hosted on Air Bnb was pricing the property too cheap. My partner on the deal handled all the posts on Air Bnb while I managed the client's arrival, departure and any issues that came up along with any maintenance concerns. The home was in superb shape with all new appliances, paint, carpet, hardwood floors and furniture. The home was located in the middle of all the big tech firms here in Utah just south of Salt Lake City. The property was a 4 bed 3 bath home with a fenced backyard, 2 car garage on a quiet street. It really was a nice home and well decorated. When the home was posted on Air Bnb my partner used the suggested nightly price of $50 per night as this was the going rate for the other nightly rentals in the area. The problem was that we were renting an entire furnished home and the surrounding nightly rentals were for a single room in a home. At the $50 a night price we got difficult visitors that were hard on the home, very demanding, complained a lot at all hours of the night and left the home filthy dirty and ultimately left poor reviews. Bookings for the property slowed down and my partner lowered the price to $35 a night! At $35 per night our property was completely overlooked and bookings stopped completely. Not knowing about the nightly price and trying to figure out what was going on I pulled up the Air Bnb listing and was blown away at how cheap we were offering the property. I asked my partner why we were listed so cheap and she told me that was the price Air Bnb suggested when she created the listing so she went with it. A hotel 2 minutes away was over $220 a night! We raised the price to $175 per night and bookings started to pick up but we had already received several 3 and 4 star reviews so people were reluctant to book with us. The few clients we got at $175 per night were wonderful! They left great reviews and told us we should raise the price because $175 was too cheap and they almost did not book at that price because they thought something was seriously wrong with the property at that price. We kept the home on Air Bnb for a few more months and played with the nightly price but the damage was done. After 4 months we decided to sell the home. I have checked Air Bnb a few times since for that same area and home. The average rate is $250-$350 per night and the properties are full of bookings. Lesson learned.
- Property Manager · St. George, UT · Member since 2020 · 48 posts · 37 votes4y
As a property manager, my biggest mistake can be is mismanaging expectations. Always under-promise, (then try to) over-deliver. I've lost clients to a competitor because my projection wasn't higher than theirs. And I'm ok with that. I ran with my data & felt comfortable with. If the competitor can deliver the number they projected, they earned it. If not, I'll be here waiting with open arms (Cue: Journey). 😄
I don't consider myself a Business Development Manager...I'm an Expectation Manager. Happy clients with realistic expectations are the results I'm after.
- Rental Property Investor · Alexandria, VA · Member since 2021 · 21 posts · 18 votes4y
@Scott Roberts this advice is so helpful!! As a new investor eager for the first deal it's very tempting to try to make the numbers work or not stick to your cash flow goals but I know it's better to wait for the right opportunity instead of being overly eager and getting stuck with a bad deal. Thank you for reiterating that very important point!
- Realtor · Odessa, FL · Member since 2019 · 3 posts · 0 votes4y
@Melanie Stephens
Yes, I tried to take out a Honeycomb by myself, looking videos and getting "recommendations", however more bees came going inside of the back wall of the house and part of the fascia.
Finally, I called a honeycomb remover and get it done in 15 minutes without killing them or affecting the property 😉
- Member since 2021 · 4 posts · 5 votes4y
The biggest issue happening in Nashville is having to navigate the fluid state of regulations and permitting. There are countless situations where an investor purchased a home that is eligible to be an airbnb, but by the time they come to sell it is no longer allowed to be a short term rental (less than 30 days). When a property changes ownership, the current regulations override any past permitting. Many investors paid an inflated price years ago because of cap rate and rental potential that will no longer exist when they go to sell. Big bucks and a lot of unhappy investors having to navigate this in Nashville and probably many other quickly growing markets.
Ricky Hague | Compass
- Rental Property Investor · Milpitas, CA · Member since 2020 · 56 posts · 42 votes4y
After my last property, I now look for properties less than 30 minute drive from HomeDepot and Lowe's or any other good hardware store. Makes that initial setup trip much much easier.
I say it kinda jokingly but not really... I really do take it into account now that I'm looking for my next one
- Real Estate Broker · Watertown, NY · Member since 2016 · 1k+ posts · 1k+ votes4y
@Melanie Stephens - Don't skip on a quality beds! Nothing makes someone angrier than a terrible night sleep. Also, invest in sun blocking curtains and noise proof your house between floors if you're doing a large renovation (rockwool insulation)
- Real Estate Agent · Dallas, TX · Member since 2020 · 92 posts · 46 votes4y
Doing my first AirBnB so following this post!
- Rental Property Investor · Logan, UT · Member since 2019 · 23 posts · 7 votes4y
@Eric Kirkham This is super helpful. I think sometimes we have the mindset of charging lower of a price just to get great reviews and help get us started, but you have to remember with a lower price, you are attracting "tenants" that might have lower standards, therefore resulting in more maintenance and repair work. Thanks for sharing your story! We can all learn from this!
- 4yRichard EvannsBusiness MemberReal Estate Agent · Los Angeles · Member since 2018 · 35 posts · 23 votes
Ill add to what the above poster said- my biggest mistake was letting tenants push me around, demand things, ask for special treatment, get discounts, etc.
the #1 thing I have absolutely found is: The people who ask for extra things or special treatment, and especially the ones who ask for discounts- tend to be the worst. they are the ones that complain and ask for money back, and make the implication that they will leave bad reviews otherwise.
I'd say #1 mistake is, giving in to demands of entitled guests.
(NOTE, this does NOT mean that, when something goes badly, that you shouldn't compensate them, im a firm believer in giving discounts when some sort of lame thing happens (e.g. hot tub craps out and guests cannot use something that they were seriously looking forward to, and things like this- but when they ask in their initial message "would you consider taking less" - absolutely never. Im ok w staying empty rather than having a bad guest)
"Act as if" someone said, about success. Act as if your Bnb is great and that you have something that everyone should be thankful to have, rather than something you are desperate to give away for cheap- and then it'll be true. (or something like that)
Bigtown Homes59 Reviews - Contractor · Ariel, WA · Member since 2021 · 6 posts · 0 votes4y
@Melanie Stephens
Our biggest mistake is not having reliable cleaners.we don't have enough units to hire someone full time and most cleaners charge per unit and not per hour.So we are stuck cleaning units which take alot of extra time away from us.
- New to Real Estate · Fayetteville, NC · Member since 2019 · 33 posts · 49 votes4y
@Melanie Stephens This is a great topic and I am going to break it up in different categories:
First, I am a huge fan of the BRRRRnB so rehabbing the house properly is key for me. Lessons learned for rehabbing a home: 1. Purchase the nice faux wood blinds especially if you allow pets. The faux wood doesn't bend and look like garbage when dogs run to the windows, Also, it is easier for cleaners to wipe down and they don't have to worry about bending or snapping them. Second, buy the taller toilets over the shorter toilets. The taller toilets are a little bit more expensive but well worth it. Two biggest reasons for the taller toiles is people who have some extra baggage don't flop on them cracking the seal and it is also easier for people to squat up and get off the toilet. 3. Do as much as you can to help be energy efficient. Proper installation in crawl space and attic and around windows. Keep those utilities bills down.
Insurance: Make sure you get property insurance that specifies or is okay with STRs. Some vacation rental insurance may not cover STR because of the state you live in may have a grey area for STR and they don't meet the same standard as a traditional leased vacation rental home. Just be sure an ask.
Documentation. Create a digital filing cabinet of all the paperwork and repairs that have been done. Also, cleaners that send pictures after the their cleans and have receipts for things that you have purchased. This makes it a little easier when dealing with Airbnb and if there was damages to your property. The receipts are important to show the value of an object that has been damaged.
CLEANERS. This is the hardest thing to manage in my book. But first ad foremost; cleaners that understand STR and the turn around. Educate them on the process if their are damages so they know what info to send you immediately; especially if you have guests coming. Cleaners who are willing to adapt to the software you use is so valuable as well. We are local STR managers, so we are boots on the ground but having a cleaning company that can help the process of reporting damages can be great.
I can talk about a ton of topics and would love to answer any other questions someone may have!!
- Huntsville AL · Member since 2021 · 44 posts · 30 votes4y
My short term rental experience was great, and we we were making well over $1000 more each month market rent. However, the biggest mistake was not educating other owners in my condo. Some of the owners who are old fashioned and out of touch had the ideal that short term rental brought in bad people. (not one complaint, ever guest left my condo in great condition). The owners who didn't understand airbnb began a campaign saying it would negatively effect the properties value to have short term rentals in the building. When they tried to get a qorum to vote against it they couldn't get the full votes, the first or second time so the trustees continued to extend the vote until they got enough votes to get the answer they wanted. I contested that they had no authority to speak on future properties values and have negligently mislead other owners to persuade a vote for to fit personal opinions and could have negatively effected to the property values of all owners for the future. I am incredibly busy and I am not sure if I should get my lawyer involved.
Join the conversationCreate a free account to reply, vote on answers and follow this thread.