Many people who own two homes — their regular home and a vacation home — decide to earn some money on the vacation home by renting it out to people either during a specific season or year round. They view their activities more as a hobby than anything else, with the money earned just a supplementary income.
But if you want to begin a career as a vacation home property owner — so that you can “quit your day job” and just work for yourself full-time — why not invest in several vacation home properties?
It’s easy to start.
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Renting your house is a great way to enter the world of real estate investing, but most first-timers (understandably) have a lot of questions. Fortunately, the experts at BiggerPockets have put together a complimentary guide on ‘How to Rent Your House’. All the skills, tools, and confidence you need to successfully rent your house are just a mouse-click away.
9 Steps to Develop Your Own Short-Term Rental Management Business
1. Search for a triplex in a neighborhood you like.
A triplex is a house that has been converted into three apartments — each floor must have an entrance and exit and be self-contained.
2. Ensure that local laws allow you to offer short-term rentals.
Some local governments have zoning laws against home owners offering rooms or floors in their home for short-term rent. Do your due diligence to make sure the location you choose is zoned so that you can offer vacation rentals.
3. Move into one floor and rent out a second floor.
When you’re first starting out in the vacation home rental business, you’ll want to live in a house that isn’t costing you any money to buy. By renting out one of the floors on a year-round basis, you will have a monthly income that will pay for the mortgage on the home. So you’ll live in one floor, your full-time renters will live on another floor, and you can offer the third as a short-term vacation rental property.
4. Evaluate the risks.
Talk to a real estate agent and your financial planner about this investment. The agent will be able to advise you on the desirability of the neighborhood, and your financial planner will be able to inform you of all the tax implications. (You must pay taxes on the income you receive from your short-term rental, as well as any income you receive from your long-term tenants.)
Depending on the location of the property and how luxurious it is, you’ll be able to charge a sufficient amount in rent that will cover your monthly mortgage. However, what happens if for some reason your long-term renter has to leave? It may take a couple of months to find another renter — and you must have enough funds to cover your mortgage for that length of time.
5. Prepare the floor to rent out on a short-term basis.
It’s OK to rent out one floor unfurnished to your long-term tenant (although it’s a good idea to have a communal washer and dryer in a basement or other easily accessible space), but the vacation rental section of the home must be furnished with quality furnishings.
It will require a refrigerator, a dishwasher, a microwave and oven, and, of course, the latest HVAC system.
You’ll need a bed in at least one room with the appropriate furnishings — sheets, blankets, pillows and pillow cases, and a comforter and/or duvet. End tables with lamps, dressers, and flat screen TVs are also necessary amenities.
In the living room, you’ll need another TV, at least one couch and some easy chairs, reading lamps, and a couple of book cases.
The kitchen will require a table and some chairs, as well as silverware and dinnerware, since your renters will expect all of this to be provided. They’ll also expect a coffeemaker and maybe even a juicer.
You can’t purchase all these things from a thrift shop, either. They should be brand new, top-of-the-line items so that your short-term guests feel like they are having a premium experience in the space.
6. Prepare a welcome packet.
Even though you’re living in the same building, it’s a good idea to prepare a welcome packet for your guests giving them information about all the amenities offered in the space. Also provide directions to the main venues in the town for both car and public transport.
7. Place your property on as many vacation home rental marketplace sites as possible.
Even though you will be living either above or below the space that you’re using as a short-term rental for vacationers, you will still want to accept payment only through a secure portal, which means you’ll want to place your property on one of the many vacation home rental marketplace sites. That’s the easiest and most secure way to ensure that you always receive your funds.
8. Be friendly.
Even though you’ve provided your guests with a welcome packet that tells them everything they need to know about the neighborhood and lots of things to see and do in the city, you can still make yourself available and be helpful if your guests have any questions.
9. Buy another property when you can afford it.
After enough time has elapsed such that you’ve decided you enjoy being a property owner and vacation rental property manager, consider purchasing another property — a single-family property that can be used specifically by short-term renters. And once that property takes off, purchase another one. Soon you’ll have a vacation rental property empire!
Are you building your own vacation rental management business? Where are you in the process?
Let me know your experiences with a comment!