Biggest Mistakes/Lessons Learned: Short-Term Rentals
Melanie StephensPro Member
Investor · Tabernash, CO · Member since 2012 · 11 posts · 237 votesHey 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
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.
One of the challenges we've faced in our first couple of months has been people smoking in our property. We have no smoking policies, but guests don't seem to care. It is very hard to remove the smoke smell, especially when it is marijuana.
Question for the community: Who here started with STR instead of long term/multifamily?
Would love to hear more of your experience as ST for getting started in REI
I had a High School graduation party rent my place in 2020 ended up with half the high school partying in my house. Called the cops and reported underage drinking/pot but nobody came out. Place was wrecked. I tracked them down on social media and found their parents. One of the parents owned a catering business. I sent them the photo album from my security cameras of them smoking pot and drinking, among other things. Needless to say the one dad covered at least the damages but the guy behind it didn't pay a dime. The next weekend the kid filed a false noise complaint against my place. I really wanted to get this kid by reporting him to his new school after his mom blew me off, but figured I'd take the high road.
@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.
Thanks for your story. It was absolutely useful for me
@Leland S. were the students able to rent from you because they were 18? What have you changed if anything to prevent that from happening again?
We built 4(ea) cabins approximately 1-1/2 hour from my primary residence. The location is rural and doesn't have many people/companies available for maintenance, cleaning, or emergent tenant issues. All this equals unplanned trips to resolve issues that were 3 hours round trip away, often for an hour or less of work (batteries drained on our Halo door locks!!! haha). Lastly, our first year we were concerned with booking enough to make our deal cash flow, so we allowed 3 day turnarounds with random dates on all four cabins. This meant all summer, we were having to drive unexpectedly to take care of the odd issue. Lessons learned: organize your booking schedule that leans toward longer stays if you are not located close, find cleaning/maintenance/management connections early and pay them well, and change your remote wifi lock batteries often!
The upside: we crushed our first year, were given award status on Airbnb and VRBO with all 5-star reviews on each of our cabins, got to meet a lot of awesome people, and were able to spend a lot of enjoyable time on Flathead Lake. We now have a large group of repeat customers and are booking out our second year in 2-week plus periods or better thus far.
@Leland S. were the students able to rent from you because they were 18? What have you changed if anything to prevent that from happening again?
I have a 21+ policy, but the guy contacted me saying he was in town for a funeral and I decided to take his cash outside of the platform. Was a big mistake not to sniff that out. I'm stringent on the 21+ now and have increased my House Rules to very clearly state there are fines and I will call the police if there are unauthorized parties.
Wow! Thanks for sharing your lesson learned with us Eric. I am a strong subscriber to the idea that learning from one's mistake is important to progress, but learning from others' mistakes is critical to success! I hope you and your partner were able to recover and find a way to move forward. I am looking at moving into the STR sector and have found testaments in conjunction with traditional knowledge-building methods (books, podcasts, etc) have been incredibly informative. Best of luck!
V/r,
Jared
Don't buy really nice things, especially furniture, that you have any degree of emotional attachment to. I want my place to be cozy and inviting and nice but I'm not going crazy on changing out all the furniture, redoing the interior decor, etc.
In the past 12 months I've had guests destroy or damage: 1 tower fan, 3 sunroom patio chairs, 1 Pull out sleeper sofa, 1 queen sized bed & box spring. I've got a great insurance policy which has allowed me to replace these items pretty easily but it's a great lesson learned on the wear and tear furniture will take in a very active nightly rental.
Plus for kitchen items, if you get a really nice wine opener, frying pan, or knives, etc. ... they might disappear.
On the flip side, don't buy super cheap crap that's going to break easily. For example, The sunroom chairs in my condo were doomed from the beginning as the seller who sold me the furnished condo put some really cheap fabric ones in there that were going to break eventually. I bought all metal ones to replace those and they've been doing just fine and get the job done.
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.
So, if you had it to do over, would you have cancelled your next guests so that you could get the report to AirBnB on time?