How Profitable Vacation Rentals Can Get You More Money
Travel plays a vital role in today’s global economy. In fact, 10.3% of the world’s total GDP in 2019 came from the tourism industry. Now, one of the driving factors of this sector’s growth is the vacation rentals market. Do you know how profitable vacation rentals are? Imagine how much profit the industry makes with more than 400 million vacation rental users around the world today!
That’s how huge the vacation rental market is. So, if you’re planning to venture into this branch of real estate, you’ll surely be presented with great opportunities.
What Are Vacation Rentals
Fundamentally speaking, a vacation rental is a private property that is groomed to be rented out on a short-term basis. This type of accommodation gives travelers all the comforts of home that are difficult to get from a hotel. It also offers more privacy and makes guests feel as if they’re part of the local community.
If you’re thinking of investing in vacation rentals, know that you are on the right path. These properties are affordable, and you will surely find one that fits your budget. And, according to a report by TurnKey, profitable vacation rentals can earn you an average of $33,000 a year in revenue. Another research also shows that the overall vacation rental market’s global revenue was valued at $87.09 billion in 2019 alone, and it is projected to have a 3.4% compound annual growth rate (CAGR) from 2020 to 2027. These numbers are just proof of how promising this business can be.
The Best Locations to Invest in Vacation Rentals
If you want to get the most out of your investment, you must be wise in choosing your property’s location. Check out this list of the best cities for Airbnb investment 2021 has in store for you:
An abundance of outdoor opportunities awaits those who plan to visit Springfield. Tourists can discover beautiful cave formations at the Fantastic Caverns or admire a huge collection of American and European automobiles at the Route 66 Car Museum. With an estimated 3 million annual overnight visitors and day-trippers, you’ll be sure that your vacation rental will achieve high earnings in this city. The average Airbnb daily rate in Springfield is $94.
The capital city of Mississippi is home to many attractions ideal for the whole family. Aside from exploring unique museums and attractions, visitors can also enjoy annual events and festivals with the locals. Millions of people visit Mississippi every year, with the state recording an estimated 23.15 million visitors in 2017. Vacation rental owners in Jackson can earn as much as $96 for an Airbnb daily rate.
San Angelo, TX
Texas has been one of the top states contributing to tourism revenue in the US, and San Angelo is one of the cities that people often visit here. For those looking to enjoy recreational activities on their vacation, they can fish at O.C. Fisher Lake or hike in San Angelo State Park. There are also several historic sites and art galleries to have a tour. Local hosts of vacation rentals here are earning an average Airbnb daily rate of $125.
When it comes to natural beauty spots, Chesapeake is an excellent destination to explore. With its clean waterways and lush parklands, you’ll find the peace you’re longing for in this place. If marketed properly, your vacation rental can bring in as much as $145 for a daily Airbnb rate.
The largest city of the Inland Empire mesmerizes both locals and tourists with sidewalks full of palm trees and remarkable Southern California architecture. There are museums, malls, a Spanish-Colonial-inspired arts center, and a lot of outdoor attractions that will surely make the schedules of vacationers busy. Vacation rental investors can set an average Airbnb daily rate of $156 here.
Steps in Starting a Vacation Rental
Here are some vacation rental tips for owners wanting to start in this business.
Create a business plan
You should come up with a set of rules, goals, and frameworks that serve as your guide in making decisions for your business. This helps you identify any possible risks you may encounter and come up with strategies that will help your earnings grow. Making a business plan may take some time, but it will keep you on track with managing your property.
These are the things you should include in your business plan:
- Business goals and key milestones
- Executive summary, including property type and location, target market, and peak rental season
- Unique selling points (USPs) of your vacation rental
- Business management structure
- Operational plan, including your business standards and your daily management activities
- Financial history
- Customer and competition analysis
- Marketing analysis and strategies
Choose the perfect location
The most important aspect of any real estate investment is the location. The profitability of your property will depend on the demand, competition, and occupancy level where it is located. To earn high profits, you must research for most profitable vacation rental locations available.
When searching for a suitable location, you should also not forget to check their local laws and regulations. Remember that certain states impose stricter rules on short-term rentals, and some even don’t allow them.
Also, take note of the seasons. Oceanfront vacation rentals, for example, will receive bookings throughout the year, but they will be highly in demand during summer. Knowing when the high or low peak seasons are can help you with budgeting, forecasting, and marketing.
Furnish the property
Along with choosing the right location, you can easily attract guests to your property if it’s well-furnished. It’s not just about keeping your property clean, but it’s also about making it more appealing and providing amenities that will make your guests’ stay more relaxing, comfortable, and convenient.
Set the right rental rate
Offering the appropriate rental rate is a crucial part of retaining a steady flow of bookings. Of course, it will be more difficult for you to attract potential guests if your rate is too high. On the flip side, offering a very low rate might end you up losing your investment.
You can get an idea of a competitive rental rate by comparing rental properties in your area. You can also use a vacation rental income calculator that is available online.
Work on your marketing strategy
Take advantage of the Internet to make your property known. Start by creating a good vacation rental website and using social media to reach your target market. It’s also helpful to place your property on multiple listing sites. During this step, write a detailed description and post outstanding pictures that highlight the best features of your property.
The numbers don’t lie as to how profitable vacation rentals are. Just make sure to choose the right location, plan properly, and come up with the best marketing strategies, and you’ll be on your way to seeing good returns on your investment.
If you need more insights on business, traveling, and other topics, read our other articles!