With the recent boom in vacation rental properties, it’s no surprise that many investors are looking to dip their toes in the pond. After all, when managed correctly, vacation rentals can generate more income than their long-term counterparts, especially if you select the right location.
However, mismanagement can also be costly. For every success story, several investors lose big money and, even more, struggle to turn a profit. Do you want to avoid making expensive mistakes along the way? Would you like to know the top 6 mistakes new vacation rental owners should avoid? Stick around till the end of this insightful article to find out.
Top 6 Mistakes New Vacation Rental Owners Should Avoid
- Putting Minimal Effort in Your Listings
One of the most common mistakes vacation rental owners often make is putting minimal effort into their listings. As a result, many landlords tend to stick to popular booking platforms like Airbnb and Vrbo. But you'll miss many potential clients if you restrict yourself to these services only.
Promote your rentals on as many platforms as possible. Although popular sites like Airbnb can help you generate sufficient traffic, there are other ways to limit vacancies in your rental. For example, you could create a social media page or website for your units where people could find out more information and get in touch directly. Also, try to leverage traditional media. For example, you could share flyers at restaurants, airports, and popular tourist spots where vacationers in need of accommodation can easily spot you.
- Accepting Every Booking
If you struggle with finding tenants, it might be exciting when someone finally reaches out and asks for a room. First, however, you have to be wary of all guests that arrive. Unfortunately, some property owners make the mistake of performing a less thorough tenant screening because their renters stay for a short time. But this habit could put your property at risk.
When managing a vacation property, you must create a booking policy and stick to it. The policy should include regulations on maximum occupancy per room, acceptable items, and deposit rules. It would also be a good idea to lay down the law on identity verification for bookings.
- Having No Provisions for a Damage Deposit
It's not uncommon for long-term landlords to ask tenants for a security deposit. This fund remains in the custody of the property owner during the tenancy, and they can deduct from it to repair tenant damage as appropriate. However, many landlords don't see the need for that extra security with short-term stays. While that might be true for most guests, it could mean not having insurance if something expensive is ruined during their stay.
Create a provision for tenants to pay a refundable damage deposit during their stay. For example, you could hold cash or a cheque until they're ready to leave. However, remember to perform a check-out inspection before they go.
- Being Lax with the Rental Agreement
Another common mistake among new vacation rental owners is being lax with their rental agreements. Sometimes, landlords don't even see the need to have tenants sign anything before unpacking their rooms. However, this harmful practice could leave you shouldering the responsibilities of unnecessary damage, subletting, or criminal activity.
Ensure that every tenant signs a valid rental agreement no matter how short their stay is. Ideally, this contract should mandate that they act according to your establishment's policies. Thus, you can take them to court if necessary if they violate specific rules.
- Operating Without Insurance
Insurance isn't for only long-term landlords. One could even argue that since property owners of short-term rentals see more foot traffic, they need more solid policies. After all, your investment is at a higher risk of sustaining damage. Thus, you'll have something to fall back on if there's an unfortunate event like a fire or flood.
Find a reputable insurance company and ask about their existing policies. You can get a quote from more than one to ensure you identify the one with the best coverage for your needs.
- Forgetting to Ask for Reviews
Finally, property owners sometimes forget or are too shy to ask their tenants to leave a review. However, by doing so, they could miss out on the opportunity to encourage repeat guests in vacation rentals.
Go out of your way to ask guests to leave a review on social media, your website, or whichever listing service they found you with. You don’t have to make it mandatory, but a gentle reminder could go a long way. More so, if they enjoyed their stay, they would love to help you out by promoting your business.
With these top 6 mistakes new vacation rental owners should avoid, you should be able to steer clear of pitfalls and turn a massive profit. Putting a solid business plan in place with widespread marketing and a strict policy for selecting guests can help keep a steady stream of responsible guests. Additionally, enforcing a strict rental agreement, buying insurance, and collecting a damage deposit can help you protect your property. Finally, never feel shy to ask for reviews and testimonials from previous guests to capture the interests of newer ones.
You should hire a professional if you need a guide to work your way through and help you avoid these mistakes. An expert property management company can oversee the advertising, leasing, and administrative aspects of owning a vacation rental. They can also help you make better decisions that improve the financial standing of your business and earn you more money.