Congratulations on joining the BP community @Matthew Marcley! I listened to BP podcast religiously for a few months before getting my hands dirty too.
I’m currently running a vacation rental in Waikiki and thought I’d share some details from my experience. I’m 100% with @Christy Greene on vacation rentals being a SERVICE business model and thus requiring a lot of work. You have to brand, market, and come up with a system to raise and maintain customer satisfaction. Please note that everything below is written from this standpoint- of building a vacation rental business of your own.
My partner and I decided to pursue this line primarily because of the location we happened to be in (Waikiki), but also because we had always been interested in building a hospitality-service business. It’s very demanding, but there’s a lot of room for creativity as well.
One thing we discovered is that communication is they key to everything if you want people to respect your property. We always meet and greet our guests before every check-in, show them around, and give them our contact info in case they need anything during their stay. We've been lucky enough thus far with having guests who are very respectful of our room, but we know it's because we strive to keep a good relationship with them from the start, and let them know we're there in case they ever need us. You can automate everything (which seems to be the trend) as well, but just know that there's a risk involved in not being physically around, and it will affect the type of customers that will stay in your room. This also goes for the pricing, size, and layout of the room - a cheap studio will attract a certain kind of people, whereas a high-end beachfront house will attract another. Factor these into the calculation beforehand. You want to balance your budget, goals, the vacation rental market in your area, and what's available in the market to achieve the highest ROI.
We’re now trying to build a team so that we can delegate our tasks and expand our service. But I’d say it took us at least 6 months of doing everything with our own hands to truly understand the market and the product (service/property) we’re dealing with. I've tried hiring property managers before but they're also a business, and many of them will try to yield maximum return for minimum input. They were too low-par for what we're trying to achieve, but it's a valid choice if you just want to be an investor and not interested in putting your heart and soul into the project. Know that you have less control over your property, they'll take a cut (30% of sales in Oahu) and you'll still need to cover the cost of everything if anything goes wrong (like bed-bugs), so you will need to find someone that's really good at what they do.
Oahu’s Airbnb market seems to have become oversaturated in the recent year or so, and there’s a huge gap between a successful and not-so-successful property, even in a resort town like Waikiki. It does take a lot of work and creativity in creating a product (room) that enjoys high occupancy % and customer satisfaction. It’s hard, but it’s fun and gratifying as well!
I’d advise you to think of vacation rentals as a business model and that you’re selling a service and a product to travelers. That should guide you to a location that has the most potential in attracting your customers, and the type of renovation that is required to turn it into a desirable destination.
Also everything @Jeremy Hunter has said here as well. But also remember, property managers and agents have a conflict of interest with you (they want you as their customer). So be mindful, and if you can talk to a peer who’s already done a similar investment, get their honest opinions. Also try to analyze your own experiences of staying at a vacation rental and/or hotels, and the factors that made them good/bad from a guest’s standpoint. Imagine yourself as the customer first, then make something that satisfies you!
Best of luck and looking forward to your updates!!
Aloha,
Erica
