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.
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.
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.
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.
@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!
My biggest lesson learned, was don't brag about how great I am on BP.
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 😉
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
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
@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)
Doing my first AirBnB so following this post!
@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!
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)
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.
@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!!
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.
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.
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.
Thanks for your story. It was absolutely useful for me
@Leland Smith 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.
Originally posted by @Alicia Marks :
@Leland Smith 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!
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.