A vacation rental business requires a lot of planning.
Here, you’ll need to identify and understand your target market segments. You need this information and more to determine what type of vacation rental properties to develop.
In some cases, you don’t have to own any real estate. Different business models work for different investors. It all depends on where your preferences lie.
In this article, we’ll be discussing ways of starting a vacation rental business. This is for interested investors seeking to leverage opportunities within the industry.
Where’s the Location At?
Location is everything when it comes to establishing a vacation rental business.
First off, you want to locate your business where tourists are never in short supply. You’ll need to look at the top leisure destinations and also look for those closest to you.
If you live within proximity to one, it may be a great idea to bring your desire to fruition.
Great locations within the United States include Acadia National Park/Bar Harbor in Main, Great Smoky Mountains, Tennessee, Sonoma County in California, and Denali National Park in Alaska.
These are just a few of many suitable locations to start a vacation rental business. You want to also know whether such a location is suitable for multi-generational tourist visits or not.
If you don’t plan on owning any real estate, you may want to look for a home to host.
For your business to be profitable, you’ll need a location that’s within your budget with long-term rental rates. Of course, the supply of tourists is crucial to your success.
Have you worked Out the Profitability Index?
Before launching a vacation rental business, it’s essential to assess the investment’s attractiveness. Here, you’re looking at the potential for returns or the future expected profit inflows.
It’s never a good idea to start your preparations without the input of a business expert. You may require the help of a licensed accountant or other financial experts.
Also, consider talking to some industry experts to have an idea about profitability potential.
All types of businesses thrive on partnerships. For a vacation rental business, you’ll want to identify persons to partner with. Here, the landlord is a crucial stakeholder to your success as a vacation rental business owner.
With a location decided, you’ll need to find landlords with properties being advertised.
One easy way to seek out such information is by visiting apartment search sites. With a landlord identified as a potential partner, you’ll have to schedule an in-person meeting.
Of course, there should be no commitments over the phone.
The strategy is to establish a rapport between yourself and the landlord. One way to do this is by having an irresistible offer ready.
Before the offer is made, you’ll have to assess the property whether it suits your vacation rental business idea.
If it does, you may request to pay rental costs upfront covering several months. Be prepared to also foot liability insurance, the cost for furniture (where necessary), and marketing services, and other related costs.
The partnership should be such that creates a win-win situation for all parties involved.
If you prefer outright purchase of properties over renting one for hosting purposes, then you’ll need a great deal of research. Such research is necessary to help you identify which locations will attract the most visitors or guests.
As the property owner (after buying the property), you’re more involved. You’ll need to have a team that manages such properties while also running a successful vacation rental business.
Success strategies will require having a vacation rental business plan in place.
A plan is indispensable to the successful launch of your vacation rental business.
Such a plan not only ensures the smooth takeoff of your vacation rental business but also helps with strategy implementation. With such a tool (business plan), you’re able to roll out your services most efficiently and cost-effectively possible.
Prior Experience Helps
Starting a vacation rental business requires prior experience.
In other words, interest alone won’t be enough to guarantee success. With prior experience comes knowledge. You’re able to better actualize your desires while navigating the rental business to stability.
Does lack of prior experience preclude the possibility of starting a vacation rental business? Not at all as long as you work with experienced hands!
What you lack in experience you can get by hiring industry professionals or consultants to help actualize your desire.
Understand all the Risks Involved
There needs to be a thorough understanding of the risks involved in starting and operating a vacation rental business. For investors hosting a property, you’re paying upfront for lease and damage without any assurances or guarantees of success.
This scenario isn’t to scare you, but rather prepare you for what to expect. The prospects are immense. However, you must brace yourself for any risks that may be encountered along the way.
For experienced investors, this wouldn’t be much of a challenge as they’ve faced and surmounted such risks in the past.
Only Take Calculated Risks
Having identified the risks, it’s best to only implement calculated and well-thought-out strategies. It’s important to note that certain risks cannot be avoided.
However, with strategic implementation, your business is likely to thrive in the face of adversity.
Are there Business-Friendly Policies within your Targeted Area?
One thing you have to consider before settling for a location for your vacation rental business is the type of policies in place. Certain locations or cities have pro-business or friendly policies that promote business growth while others don’t.
You want to check the parameters showing the ease of doing business within such a location. Action taken should be influenced by your findings.
In other words, avoid locations with unfriendly business policies as businesses are likely to struggle under such policies.
Success Lies in the Strength of your Team
The makeup of your team will determine the success of your vacation rental business to a great extent.
Here, we’re talking about having skilled personnel handling the daily operations of your rental business. Team members include those in a management position as well as low-level staffers.
As seen so far, starting a vacation rental business involves a great deal of preparation and planning. These have been laid out with emphasis on experience and skilled hands.