I've been doing some research into the short-term rental market. Browsing on Airbnb in my city and analyzing prices, availability, etc. Economically, they make a lot of sense given the higher comps and cash flow I can pull vs. an annual lease.
I also believe that a lot of the day-to-day can be automated (i.e. listing the property, booking it, keypad lock entry, having it turned over for the next rental.)
QUESTION - If anyone has a short-term rental, I'm curious to know if they are more or less difficult to manage? Are there common problems that come up with short-term rentals, which the average real estate investor wouldn't consider?
I'd say the biggest surprise some people find when getting into this business is just how much of a customer service job it really turns into. The attention to detail can mean the difference between 4 and 5 stars across multiple booking sites.
And not just in dealing with guest interaction when they are on property, I'd put time management and communication skills right up there with customer service skills.
Poor communication with potential guests will see your listing dropped in search results by Airbnb and VRBOHA. If your AVERAGE inquiry response time on the booking sites is greater than 24 hours you're going to start suffering in searches. I'd even say a good 25% of my bookings are accepted and paid before some of my competitors even bothered to respond to what I'm sure are inquiries from the same person that asked me about rates for a particular week/month.
And once on-property, if you're not checking in, being pro-active about making sure they're happy or spot checking occasionally to top them up on towels or what not, you may see your ratings tend towards the non-5 star.
So to sum up, I'd say if you're coming from a long term rental mindset, the attention to detail and constant communication would be the biggest shift in mentality.
similar conversation here.
A VRBO is much more work but it is a labor of love and I have a free lake house to use when I want.
I hardly hear from my long term tenants. The rent just goes in the bank every month.
The VRBO is not terribly difficult and I enjoy it. There is the customer service element, looking at making constant improvements, replacing items as needed, making sure consumables are restocked.
You could outsource everything if you wanted but I like being in control of many aspects and have 60 five star reviews on Homeaway because of it.
I would recommend getting into the STR game. It is really nice if you can have a place that your family would like to go to on vacation and not only have it for free but make money off it.
@Jon D. Great question! I agree with a lot of what was said in other posts, but also want to clarify in how you can do short term rentals with minimal hands interactions by you.
First, everything we do is automated. Never, never, never do we drop off towels, or drop by to see how they are. If they wanted that kind of service they would have rented a hotel for 3 times as much. Screening potential vacationers is key and we have identified certain indicators over the years that mean trouble!
Anything you can automate with a VA is key. You hand write all the responses that you want the VA to give for certain questions. Example: Hi, we need additional towels today!!! Answer: I am so sorry you are running short on towels. We provide a certain number to every party according to their party size. If you need additional towels, and can't do a load of them in the washer please let us know. Thanks!
Ok, that comes up often but redirects the vacationer. If they then come back with a no way or we are not going to do that. We equip a closet with multiple items for a just in case scenario. It has a code on it that we provide as a very last resort. Well, we don't the VA does. We also train the cleaning service on each item provided, soap, towels, plates, etc. The fully stocked supply closet is the key.
In the end, this business is more labor intensive in the beginning but can be automated to dramatically decrease hands on labor. Take care!
P.S. We keep all our properties stocked around the country by using Amazon. I get a monthly request or needs analysis by the cleaning company and we Amazon everything to the property. Well, we don't the VA does.
Excellent point @John Underwood that's probably one of the biggest advantages of STR, when the guests aren't there you can enjoy the property.
I'm completely hands on with my 22 STRs. The furthest one is 7 minutes from my house. The closest is 3 minutes. I personally collect rent, mow, do most repairs and maintenance, restock them, etc. I'm the one that shows them to prospective tenants. 98% of the time they take the house after seeing it. The ones that don't take the house end up staying at a mobile home park that has furnished trailers that cost less than my houses. My 2 bedrooms are $400/week. The trailers are $600/month.
Very good point @John Underwood . In my case, I live in the city and would be investing in the city as well, so wouldn't necessarily be using it personally. But that benefit makes a lot of sense for VR's!
That's very similar to what I was thinking @Eric A. - and it sounds like you've got it down to a science.
Short term rentals are a little more hands on at the beginning. I've been doing it for 7 months and I'm slowly automating everything. The most common issue that you will have someone asking is the Wi-Fi password but as far as everything else goes it helps keep your property in tip top shape with all the constant cleaning but overall it is more hands on. If you want the Airbnb money with less work then you should go the corporate rental route.
@Jon D. (I didn't read everything)
More work. More money. Our goal is to gross as close to 3% per month as possible. If for no other reason than that's what it takes to make it worth our while.
You will constantly deal with people who do not READ. To the point where you will question if they even have the ability to read. It's easy, but it is nothing like a LTR. It's like bartending. I bartended/owned a bar for many years and it is very similar. Everyone is walking in to your house expecting things from you, then they leave when their money is gone and come back when they have more money. Or they leave and take their money to the bar next door if you're a bad bartender.
Happy to hop on a call with you anytime and run you through the entire process and answer questions. I'll talk your ear off for sure. Send me a PM. Very happy to help.
Funny you mention the corporate rental route @Myka Artis . Have you done that? Is there an established online marketplace for corporate rentals (i.e. an Airbnb for corporate rentals)? Or is it just about marketing to local corporations?
Thank you @Lucas Carl - I might take you up on the personal consultation!
@Jon D. Yes you can post your furnished rentals on CHBO, Craigslist, Airbnb, etc and get corporate renters. Most of my corporate renters come from CHBO which is corporate housing by owner. I personally only do corporate and Airbnb rentals.
Thanks @Myka Artis — I’m going to do some more research on the corp rental route and I might come back to you with some questions, if you don’t mind.
I don't mind at all!
Hi Jon - I have done an airbnb/vrbo here in Nashville for over a year and have had good success with it. Happy to help with any questions you may have.
I see several responses from people in Florida with experience in STR. May I ask how to determine if a particular area is good/profitable for short term rentals? Also, how does one determine if a particular property can be profitable as a short term rental? Thank you!
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This is a good long term experiment. She goes over the pros and cons in her experience. The big things are that it is a bit more money but a lot more work. You are no longer a landlord but a small hotel.
@Jon D. I do a lockbox because it is much easier. There can be problems with keyless entry. Some people have never had an issue but I prefer just regular keys. It varies month to month how much time I spend on it. I think on the high end maybe 5 hours. Once it is up and running it is easy to maintain. It's getting a system in place and everything ready that is hard work. It isn't hard to manage bookings. You need a good cleaning lady or cleaning crew. That is one of the most important things. And I would suggest making a checklist for the crew so they go over it each time they clean. Forgetting to check for tv remote or forgetting to refill the coffee can cause a bad review and it's all about the reviews.
@James Canoy I read through the post you attached and it really looks like the poster had no idea how to run a business let alone an Air BnB. Some people struggle with delegating and following a system to eliminate all those issues that are hands on.
Originally posted by @Eric A. :
James Canoy I read through the post you attached and it really looks like the poster had no idea how to run a business let alone an Air BnB. Some people struggle with delegating and following a system to eliminate all those issues that are hands on.
Interesting. What have you found helpful for setting up an airbnb that can be hands off?
@James Canoy several things that can be automated and setting expectations early with tenants. Shoot me a PM and I can share with you several strategies. Also, take a look at other posts I have made.
Short term rentals are much more complicated to manage. On occasion they can be more lucrative than long term rentals but they require more work such as scheduling cleaning maintenance repairs maintaining a good list of contractors that can work on emergency details like electricians AC plumbers etc. Making sure you are have all the right licenses and permits required. There are a lot of illegal rentals out on the markets and they should be more regulated because a lot of customers get turned away from renting from having a bad experience with a rental which shouldn’t be on the market.
@Juan Duque sorry, I totally disagree. You will need to have the same contacts for all the people you mentioned in a long term rental. AC goes out and you will need someone there ASAP no matter what kind of rental. There is more work in the beginning, but only a small amount more. If you subtract out the time spent interviewing long term tenants it's not much different.
Everything can be accomplished with proven systems and setting customer expectations. The number one thing to do is automate everything you do so everyone on your team has a playbook for everything. Missing sheets? Go to the playbook and see what to do. There should be no need to call you for the smallest requests. Take care and I wish you the best!
@Jon D. don't manage it yourself. You have to take inventory, respond to guests at all hours of the night, schedule cleaning services to come (and make sure they show up - if they don't, guess who will be cleaning :) ) Deal with questions on airbnb about inquiries all the time even though it's in your book on the counter or in a message or on your listing. Guests lock themselves out, they do dumb things and might need to be evicted immediately, neighbors complain about loud noise or bright lights. Something is broken and they expect it to be fixed yesterday because "I am paying a lot of money to stay here." (it's probably they don't know how to work the smart tv you bought for the place). Just don't do it
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