With the new airbnb house rules hitting Nov 20 (no asking guests to strip beds, do dishes or haul trash), I've heard rumblings and read articles (probably like many of you) of a lot of frustration. I think much of it isn't really about chores. Airbnb now takes 15.5% from hosts (cleaning fee included), Vrbo moves to a flat 12% on Oct 29, and cities keep adding rules and taxes. Everyone's taking a bigger slice, and the host is left with the bill and the risk. Through a few more requirements and the frustration boils over.

So, while STR can still be a great business, in my opinion it is not unlike any other business where healthy margins exist - everyone comes for them to get their piece and sustained success is about disciplined acquisitions and disciplined operations. I'd rather say no to a risky deal and miss the upside than say yes to a risky deal that jeopardizes the rest of my business.

That being said, I've been running short term rentals in regulated cities since 2019. In that time I've seen successful growth year over year despite the regulators and OTAs taking a bigger slice of my pie. I also went from a passive host with a paid manager to a full time host who operates a management and investment business that specializes in short term rentals. If you're new or experienced, learning from others has always helped me. So I figured I'd share some tips that I've learned over the years:

1. We measured every step of a turnover. I initially assumed that a good turnover was all on the cleaners. If they couldn't turn the unit as fast or with the quality I wanted, they were just not good cleaners. That could not have been further from the truth. As I measured the turnover process, there were all sorts of roadblocks. Laundry is an easy one to use as an example. We have lots and lots of linen back ups, so our turnovers aren't dependent on a wash/dry cycle. But at the end of the day the linens need to get washed and dryed and set up for future turnovers. In looking at that bottle neck I found that while our washers did a load in about 25 minutes, towels and sheets needed 45 minutes - 1 hour to dry. My solution, I bought a 2nd dryer. This is just one example of a solution that didn't seem obvious when I started in the business, and your business may have the same issue or a completely different one. So go through every step of your turnover bottleneck and see what's jamming it up. If you've done it in the past, maybe it's worth a revisit to make sure nothing has changed.

2. We price the cleaning fee at true cost. True cost is hard to measure so I find as obvious as this advice is, it can be a step that's harder to feel good about. Supplies cost, energy cost, lost nights due to regular turnover/maintenance issues, even your wear and tear costs. How do you not only charge what a true clean costs but how are you building reserves for the consumables and normal wear and tear items so when the costs come due, you're not struggling to come up with the cash for it. Eventually you'll have to buy a new couch, new towels and sheets, and a lot of other items. So build that reserve. Charge what a clean actually costs you, and constantly measure because things can change quickly and you want to catch it before those changes mean real dollars coming out of your pocket.

3. We audit amenities. If something adds time to every turn but nobody books for it or mentions it in reviews, it goes. If you're like me, you're proud of the properties and rentals you manage. So this one can feel a bit personal. You took the time and energy to add an amenity and maybe it didn't turn out like you wanted it to. Maybe that $5,000 entertainment setup is too complicated for guests or it keeps you up at night worried that someone is going to break it. Get rid of it. Simplify. Constantly ask your guests for feedback on what they liked or what was memorable. Ask them about specific features. Maybe you hear back what you expect but maybe you don't. Either way, asking doesn't cost you anything and it may give you insights you didn't have before.

4. We buy so the property works without Airbnb. Every short-term rental we own has to stand on its own as a mid-term or long-term rental. This paid off for me very early in my short term rental career because I bought an investment property and furnished it and released it onto Airbnb on March 1, 2020. Right as the world was shutting down. I was able to quickly rent it as a furnished rental thankfully (and had enough reserves to weather the interim period). BUT, putting pandemic related risk aside, with regulatory uncertainty for short term rentals being omnipresent, I felt like I needed my investment to work in multiple ways before I felt comfortable moving forward. Like I said before, I'd rather have a really reliable business, and am willing to sacrifice upside than get into a high risk high reward investment. Maybe this advice doesn't work for you or your market but I do encourage you to think about how you'd run the investment if something significant changes. Do you have a margin of safety financially if the occupancy rate isn't as high as you'd like it to be, or your nightly rate is lower than you expected? What happens if the municipality you operate in significantly changes the airbnb regulations? If the answers to some of these questions is: "Well I'd be F*cked". AND that would cause you serious harm , then maybe now is the time to think about building a safety net or restructuring the business so these outcomes wouldn't be so heard to take.

5. Use your biggest challenge as your main differentiator. Here's one counter-intuitive point. I believe that the regulatory environment I face, which is one of the tougher environments in the country, actually has helped my business. Let that sink in for a moment. That same environment that was such a pain with all those hurdles and licensing costs has helped contribute to my higher occupancy and rate per night. They make it harder for other operators to enter the market, get rid of bad operators, and keep supply lower than demand. If you're chasing easy, remember that a lot of other people are too, and so over time your edge may evaporate. Being successful in markets that not as many people can operate in will give you a sustained edge, so don't avoid an investment just because the regulatory environment may be tough. What that means to me is that you have LESS uncertainty. The market has defined a ruleset and now it's on you to see if you could make an investment against that ruleset successful.

These are just a few of the things I've done in my short term rental business that I think could be valuable for people thinking about getting into the short term rental business or even for experienced pros. Would love to hear what you've done to grow and sustain your business!