Today is the last post in this Vacation Rental Hosting series, and I’m so excited to wrap everything up and look back over all we’ve talked about so far! We have learned so much through this process, mostly the hard way, and I’m hoping to save you some of the bumps along the way by sharing this series with you. If you’re thinking of turning a home into a vacation rental property on AirBNB or VRBO, this is the series for you!
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If you haven’t already caught up on the previous sections, please check them out:
- Getting your home ready for hosting
- How to quickly clean your home between guests
- Composing the perfect Airbnb listing
- Is it worth it, and how do you make your home work for you, instead of the other way around? (you’re here)
So now that we’re all on the same page, let’s answer the first burning question on your mind…
Is it worth it to run a vacation rental property?
Wow, that’s a loaded question! I am not going to sugar coat this for you: running a rental property is hard work. This is not a get rich quick scheme, or easy money, by any stretch. But if you love homes, love hospitality and making people feel comfortable, and love running your own business, then this may be the job for you.
Let’s talk money first, since that’s usually the biggest factor in deciding if a proposition is worth pursuing.
How much money do we make running our AirBNB home? The honest answer is: not much. Some months are better than others, depending on seasonal factors and local events. So certain months bring in a lot of income. But the outgo, or expenses, stay pretty constant throughout the year. Those expenses are mostly made up of mortgage, utilities, insurance, and supplies for the home. We try to keep those costs as low as possible, and we remember in the busy months to save money for the lean months. Then we need to save some of our cash for unexpected expenses of the sort that invariably pop up in home ownership, like leaks and maintenance. And finally, we are using some of our income to recoup the costs of setting up the house, like furnishings, kitchen supplies, and linens.
After all those expenses, we’ve been averaging around $200-$400 per month.
That doesn’t sound like a lot of cash. (Remember when you were a kid and $100 seemed like a pile of money? I miss those days.)
So to answer the question of if a vacation rental property is worth it, you need to define why you’re doing it. If it’s to make extra cash without much investment, then I’d have to say no. (Just being honest here.) But if it’s because you have (or want) an extra home for long term investment or to vacation in occasionally, then running it as an AirBNB is a great way to pay for that property and pocket some extra money in the meantime.
For us, it’s been totally worth it. In fact, I would do it again in a heartbeat, especially after we’ve (hopefully) learned how to do it efficiently. This home was a big experiment for us, and I would call it a total success. Easy? No. Worth it? Yes.
That’s a question you’ll have to wrestle with yourself if you’re thinking about purchasing a property to use as an income rental. If you already have a property, then I think it’s a no-brainer to put in the extra effort and have it pay YOU.
And now onto the second most important question, which is…
How do I make my vacation rental property work for me?
After learning from scratch how to successfully host a vacation rental property, there are a few things I recommend to save yourself lots of time, hassle, and well, work.
Run it like a business. Anytime you make money off of anything you do, you should run that thing like a business. And making money off a home is no exception. There will be tax implications from this investment, and anytime you make money, the government will want some of it. If you don’t put in the effort up front to keep track of your income and expenses then you’ll be scrambling to make sense of it all at the end of the year.
Also, I guarantee you’ll be spending money here and there on the house supplies, and you’ll need a way to account for that money, which brings me to my next points.
Have a separate bank account. Part of treating your property as a business is to open a separate checking account for it. I know it’s kind of a hassle at first, but this will make it so much easier to keep track of expenses and income.
Keep receipts. Whether they’re electronic versions, or good old printed receipts, hang onto your receipts! You can get tax breaks from certain expenses, if you can show that they were legitimate business expenses.
I think the best way to keep track of your receipts, as well as your separate bank account, is through accounting software such as FreshBooks. It’s easy, inexpensive, and it’s a write-off!
Consider officially creating a business, as an LLC. Anytime you’re making money, you want to think about protecting yourself from liabilities that could arise from your business dealings. An LLC separates your business from your personal assets, and can give you some personal protection from lawsuits. NOTE: Every state has different laws on incorporating businesses and I am certainly no expert, so check with a local accountant or attorney to find out how to proceed.
And speaking of accountants, brush up on tax advantages of running this type of business. That would be a whole ‘nother blog post that I am definitely not qualified to write, but it will be worth it to get help with this at the very beginning to save yourself time and money along the way.
Don’t be afraid to ask for help! (That’s saying a lot from a hardcore DIY-er like me.) I like to do everything myself so I can learn the systems and understand how things work. And that’s how we started with this house. But once we learned how everything worked in the house, and worked out some kinks (like a leak in the laundry room that we caught the first time we washed sheets and flooded the whole room), we decided it was worth it to bring in some help.
Handyman – unless you are handy yourself and have lots of extra time on your hands, this is the first thing I would hire out for a vacation rental property. When a guest finds a leak on a Friday night, it’s a beautiful thing to call your handyman and let him take care of it. Sure it costs money, which comes out of your bottom line, but if you have a busy family like me, it’s so worth it.
Housekeeper – same concept here. We recently had a group of guests checking out on Christmas day and a second group checking in, all in four hours. My husband (and my children) would have divorced me if I had spent Christmas day frantically cleaning and resetting the rental house. We hired a wonderful housekeeper who takes personal pride in keeping our house spotless and welcoming, and she’s been worth her weight in gold. Note: AirBNB and VRBO assume that you will have a housekeeper and allow you to charge a one-time cleaning fee along with each reservation. We simply asked our housekeeper what she would charge us and made that the cleaning fee.
Booking Manager – this one is a little less common. We decided to get help with our online booking and marketing by hiring a management company. We found Evolve Vacation Rental, and have been so happy with their service. They helped us write a compelling listing, they sent a professional photographer to the house, and they helped us with setting competitive rates. Then they listed our property on the five main vacation rental sites. They also recommended a trusted professional to use as our housekeeper, and they communicate with her directly about scheduling, so she always knows when she needs to be there between guests.
Between Evolve, our housekeeper, and our handyman, we could be totally hands-off with the home, if we wanted to be. That’s not our goal, but it’s certainly helped us keep our crazy family lives on track while running this side business.
Once you get organized and get help, the last element to running a successful vacation rental property is to get busy.
Don’t wait – When you have a dream or great idea, get to work! Yes it’s a lot of work, and yes, you’ll probably hit some bumps in the road (ask me about the time we forgot to pay the water bill and they shut the water off while we had guests in the home!), but the only way to get to the fun part is to get started.
Talk it up – I was surprised how many people had helpful advice and experience that they wanted to share when I started telling friends and family (and sometimes total strangers) what we were doing. Everyone was interested. Friends offered me house furnishings, help with accounting, and best of all, my friend Jen showed me everything she’s learned from her rental homes. Don’t be shy to share your dreams with people. I felt like the more I shared this crazy idea, the more it bloomed into reality, thanks to all the feedback and encouragement along the way.
Share the love – speaking of sharing, don’t forget to share your experience and your home on social media. I love facebook and instagram for posting pictures of the home in all it’s prettiness. Pretty pictures grab people’s attention, and you never know whose great aunt is looking for a place to stay during their next family reunion. Sharing your property on social media is a fun informal way to get the word out, and let people easily share your post to all their people. I’ve said it before, but it bears one more repetition here… People rent AirBNB’s because they want a personal touch. And knowing the person behind the home through social media posts may just convince someone to rent your property instead of a hotel next time they’re in your town.
Well, that’s it guys. That’s everything I know (so far) about running a successful vacation rental property. Some days it still feels like it’s running me, but most days I get to sit back and watch the deposits hit our bank account. And that’s just plain fun.
I hope this has answered some of your questions, and brought up a few that you hadn’t thought of yet. Please let me know in the comments if you have questions. (But first go back and read the other posts in this series for the rest of the tips, tricks and checklists that I’ve already given you.)
Here’s wishing you a very fun and profitable adventure in vacation rental hosting!