Starting your first short term rental

A guest recently asked for some tips on starting a short term rental. Other guests have asked this before as well. Below is part of my raw email to the guest. I thought I would share this with the world and let you provide your thoughts. It is by no means a complete list ... I wrote this in one sitting, read through for one review, and hit send. So take it for what it is worth. Not perfect but experience based thoughts.

I could probably write a novel of tips for short term rentals but here are a few. In general, short term rentals have much more than what meets the eye. If you want to be more passive, I suggest using a management company like Evolve.

The information below is not to scare you off but to really understand some of the things it takes. I have a high tolerance for risk and often leap before having it all figured out because I trust my instincts - here are some things I have learned.

Determine your strategy

Why do you want a short term rental? This may shape your approach and planning.

- Personal cashflow and income?

- Personal vacation home that rents out to help with expenses?

- To grow a short term rental business?

- Future home for your kids?

Understand the market

- COVID has caused massive market saturation throughout the US and we are walking into a recession. Don't trust market data based on the last two years (e.g. expected revenue and occupancy rates). Occupancy rates are down because of high saturation and lower demand.

- Find a location that natively has a flow of people due to attractions. This will help mitigate hard times.

- When you find a location, go onto Airbnb and do some raw research. Pull up listings, scroll down to their calendars, how much are they booked in advance? Analyze good listings, bad listings, how much they are renting for, etc.

- Read the state, county, city, and HOA rules / ordinances before you buy and come up with a plan to keep up with the changes to rules. Bailey added an application process and ordinance after we started renting. This year I spent about $6-8k due to needing reactive permits missing from previous owners of the cabins (multiple permits and electrical/plumbing work - I also had it easy overall). The process also took from April to December...

Calculate the deal

When you find a home you like calculate the following -

- Operating expenses based on as much real data as possible (trash, water, heating, AC, gas, internet, mortgage, HOA, etc)

- Cost per turn for cleaning

- Furnishing costs

- Contractor costs for fixes (rentals generally need work permitted through a contractor)

- Maintenance costs (plowing, lawn care, gutter cleans)

- Accounting / Tax costs

- Set what rate you expect to charge nightly and any other fees

Marketing and social media

Short term rentals have become less about posting a home on Airbnb and letting the bookings come in

- Are you going to pay a management company?

- If you are doing it on your own, think about ... Who is your ideal guest? How can you reach your ideal guest?

Apologies, this barely scratches the surface and I am sure I am missing some things. This should give you a good start though. Feel free to reach out with questions. I may not be able to respond the same day but I will do what I can! I wish you the best in this adventure.