Many people rightly choose to invest spare capital in rental homes and there has never been a better time to list a property for short-term stays. The vacation rental market is currently forecasted for two years of elevated occupancy, with 52,000 new units already added to marketplaces in 2021.
Investors are preparing for the best annual revenue results they’ve potentially ever seen. Yet, they still all face challenges in how to manage their vacation home from afar. Here’s how you can be in a permanent state of bliss with seven simple tips for managing a vacation rental home.
Buying a Vacation Rental Home
But first, why buy a vacation rental home — aside from the amazing forecast for the immediate future? From long vacationers and slow-motion honeymooners to remote workers and locals, there are plenty of promising audiences for vacation rentals that can give you more than just a quick buck:
- Vacation rental homes can yield a steady source of income, allowing you to create a new revenue stream.
- You can make your own vacations cost effective and avoid the hassle of booking hotels.
- You can build home equity by purchasing a vacation rental home in a vibrant, sought-after location.
- Buying a vacation home helps you prepare for retirement.
- Vacation homes can help you take advantage of tax breaks.
Buying abroad isn’t as hard as you might think and can also benefit your long-term tax strategy. More and more, we’re listening to the age-old saying “safe as houses”, veering away from stocks and other investment strategies or at least spreading our investments across more than one arena.
The next port of question is how to manage a vacation rental home to maximize the exciting opportunity. Here’s how.
Managing a Vacation Rental Home
Managing a vacation rental home can be a hands-off affair, meaning it's a perfect avenue for serious investors and people expanding a bulging portfolio. Most management tasks can be outsourced and at a fair price to those in the local area. For complete peace of mind, it's best to work with a reputable management company that will take care of everything for you.
It’s easy for any type of investor to snap up an out-of-this-world property development opportunity as it doesn’t require much hard work from the owner — just a smart management strategy.
However, if you do decide to go at it alone or outsource your vacation rental home tasks to multiple companies or businesses, here's what you need to know.
Tip #1: Double Down on Hygiene
Housekeeping is an obvious area you’ll need to outsource either hiring an individual cleaner or a professional cleaning company. Now, more than ever though, cleaning and hygiene are very important if you are to achieve vacation rental success.
Since the coronavirus pandemic, all holidaymakers have become especially conscious about the cleanliness of their hotel suite. Increased frequency of cleaning and disinfecting procedures are ranked as the number one way to improve customer comfort levels, with 60% of the vote. So, it’s worth ensuring that whoever you outsource cleaning duties to champions more stringent practices.
Tip #2: Communication and Project Planning
Another deciding factor is your response rate. Although you personally might not greet guests or answer their initial questions, it’s essential that someone else does, either by using property management software or by keeping their eyes on online booking sites.
Hiring a property rental management service is likely your best option. They’ll take care of any guest queries and make sure there are no mix-ups regarding booking schedules and special requests. It’s long been known that response rate can directly impact revenue, going beyond the economic value of a specific inquiry. If you let down a prospective customer, they’re likely to tell others and in an industry backed by glowing reviews, that’s a bad position to be in.
This is where a third party with industry expertise is valuable. Hospitality giants, such as Hilton, can help market and manage your vacation rental home on your behalf when not in use.You'd not only enjoy higher occupancy rates and average daily rates to increase your earnings, but having a brand name like Hilton on your property will make it sought-after, too.
Tip #3: Make Check-in and Check-out Seamless
First impressions and final goodbyes matter in the world of hospitality. A confusing or awkward check-in can set the tone for a trip, causing customers to feel negative about their entire experience.
Check-in and check-out are a vital part of managing a vacation rental home, even though it only takes a couple of minutes to complete. Again, management companies may cover this responsibility. However, you might also want to consider contactless options to meet new customer expectations.
Although self-check-in without a desk clerk might seem like a low-level service offering, automated key fobs and lockboxes are seen as more convenient and safe post-COVID. For example, 62% of people now prefer to check in using an application.
Tip #4: Cut Costs with Utility Automation
Much of managing a vacation rental home is about improving the guest experience. Yet, all investors know ensuring the financial health of the business is imperative. Aside from understanding the market and setting appropriate prices, there are other ways you can protect your bottom line.
Utility automation, controlling aspects of your vacation rental such as AC and lighting from afar, lets you control how much energy you’re utilizing when the rental isn’t occupied. It might be a quick win but it can have a big impact. As many as 47% of people see the expected amount of cost benefits after adopting utility automation.
Tip #5: Plan For Worst-Case Scenarios
Most investors say it’s expensive to be a landlord and they’re correct. Costly mistakes, application malfunctions and other events can leave a big dent in your wallet. Yet, every investment opportunity has its drawbacks — and this is where property falls short.
As such, make sure you have a list of contractors at the ready for any emergencies. You’ll need someone to fix the AC quickly if it suddenly breaks and your guests are left without the option to control the room’s temperature. Also, keep in mind that not every instance will be so innocent. Factor into your nightly rate room for potential damage or charge an additional damage deposit.
A typical damage deposit sits at $100-$5,000, depending on the property’s value and how it relates to your insurance. Although, this isn't a concern when a management company is managing your vacation rental home.
Tip #6: Master Marketing and Sales
For vacation rentals to be lucrative, you’ll need to fill your calendar. This means listing your property on as many websites as possible.
Your reviews, the pictures you show and even the descriptive copy all need to blow the viewer away, making them imagine how great it would feel spending some time at your property. Marketing and sales is a whole other facet of property management that needs its own expert to attend to. The imagery alone plays a 60% role in guest bookings, so invest some money into refining your product listings and watch your guest list grow.
Tip #7: It’s the Small Things That Matter
The meat of managing a vacation rental home is straightforward: making sure your place is clean, enjoyable to visit and covered in terms of costs. However, the most minute changes can make all the difference in ensuring you offer the most luxurious stay to visitors.
The difference between a 3-star stay and a 5-star sleep or even a 5-star hotel and a 7-star sensation is the unexpected perks and thoughtful touches. Chocolate on the pillow, additional bedding in the cooler seasons, complimentary beach equipment and a bottle of champagne all allow you to take the top spot.
If you can emulate the most loved amenities of hotels, your vacation rental will be a sure success, remembered for its espresso machine, soft sleep and beautifully designed bathroom.
Surely, buying a vacation rental home is now on your list of things to accomplish. It promises a concrete ROI and is easy enough to manage, even when you’re busy doing other things.
But why not consider owning a vacation home nestled amongst the pink-sand beaches of Bermuda?
Buying in Bermuda: An Unspoilt Piece of Paradise
Owning a vacation home in Bermuda has many benefits, whether you intend to use it, rent it to others or do both. With a long list of flights from major US airports, Bermuda is far away enough to make you feel like you've escaped reality, yet close enough to indulge in at any time.
From breathtaking hiking trails to unmissable eating spots, and from famous golf courses to awe-inspiring landmarks, Bermuda is the perfect place to invest in. Read our Why Bermuda? guide to explore all the reasons to invest here.