The term “passive income” is an appealing one, and over the past few years, many are exploring the option of hosting short-term rentals for that source of “easy money.” But how easy is owning or managing a short-term rental? Loosely defined, a short-term rental, or STR, is a furnished property available to rent for 30 days or fewer. Also called vacation rentals, STR sites like Airbnb, Vrbo, and Flipkey are where travelers find alternative lodging to hotels or traditional bed and breakfasts.
Let’s focus on the prospect of starting your own revenue-generating passive income source that requires little effort to manage. It can also mean working for yourself.
“It’s given me the flexibility of and the ability to have my own schedule,” said short-term rental owner Cheryl Russell. “I have found this so fulfilling. These people save all year long to come to the spaces that I provide for them and spend their one-week vacation with us here in Pensacola, Florida. It has made me really appreciate where we live and how lucky we are as a community.”
According to Airbnb.com, bookings through that platform alone increased by 31 percent, from 300 million in 2021 to 393 million in 2022. That means millions of people from all over the globe are traveling to other parts of the world to stay in someone’s house, apartment or condo. The owners of those properties have a lot to consider when welcoming travelers who are essentially strangers.
Here are some helpful tips to owning and managing STR properties to maximize travelers’ experiences as well as your own income potential. Obviously, every situation is different, but here are a few tried and true practices that have worked for other owners.
Home Warranty
Sometimes the thought of a warranty is simply another bill that offers little or no value to a property. However, in your first year or two of owning a STR, you’ll be focused on your bottom line to determine if this is a viable venture, and it may be easier to budget a single, oftentimes nominal, annual fee rather than unexpected and costly repairs. A major appliance repair before your first guest even checks in is completely possible, even for a newly-purchased property. To have to shell out for a costly service call, parts, etc., before your first reservation payout can be frustrating and make you rethink the short-term rental route. Having something to cover those unexpected costs can be comforting.
Think of Everything
OK, so this is probably not a practical or possible approach, but as you manage your property over time, you’ll begin to anticipate the needs of your guests. One way to do this is to stay in your property for a few days and think about the items you need. Short-term rental platforms offer a host of checklists of what guests look for, but that extra effort of staying in the property like a guest helps you add your personal touch and added amenities.
“Just a simple thing like having an extension cord by the bed so you can plug in your electronics” is extremely thoughtful, Russell said.
Cleaning Supplies
A vast majority of guests will be apt to keep the space clean and tidy during their visit if they have supplies on hand. Having anticipated cleaning supplies will often benefit your cleaning crew in between reservations. This includes plenty of all-purpose cleaners, degreasers, bleach, sponges, magic erasers, etc. Also consider keeping a rechargeable cordless vacuum on site; just remember to make a note in the house instructions to please place back on the charger after use. Some hosts even leave floor steam cleaners in case one of the guests wants to channel his or her inner-Monica Gellar by leaving the place pristine upon checkout. If you allow pets, keep specialized cleaners and odor-eliminators. Guests will likely manage those issues rather than be slapped with an extra post-stay cleaning fee.
House Instructions
There are many schools of thought on home instructions. Those rules-driven hosts who may run a tight ship at home may want to provide a litany of do’s and don’ts, but not many guests like to be confronted with a long list of chores. Some good practices include having the guests take the trash out upon checkout as well as load and start the dishwasher. Some hosts require guests to strip the beds and start a load of laundry prior to checkout, but simply having an extra set or two of linens for each bed can take that chore away from them. Basically, house rules should be welcoming enough to make guests feel at home but also be efficient in keeping the effort down for this passive-income strategy.
Access and Security
Florida has very specific laws regarding home surveillance that ultimately benefit STR owners by keeping their properties safe and secure. If you don’t live near your STR property, absolutely consider a robust exterior surveillance system. You must be very clear to your guests about cameras, but explain to them up front these are present for their safety and for the safety of the property. This is an expected practice, so don’t feel as though it will deter reservations. Cameras also benefit hosts with alerts when a guest has arrived or departed. Just be sure to check with state and local laws to ensure you are in compliance.
So how will guests access the property? Generally, a remote-operated keypad is a great practice because it eliminates the need to keep up with physical keys, which can often be accidentally lost or taken by guests. A best practice is to generate a unique code for every guest to maximize safety. And be sure to check battery life between guests.
Communicate
So you’re excited about hosting a guest in your STR, and you may feel inclined to check in with things – making sure the air conditioner is working, if the place was clean enough or where to find extra towels. Don’t. A good practice is observing the adage “no news is good news,” because as any STR owner can attest, if something is amiss, you’ll certainly hear about it. That works well when you foster an environment of support by answering questions through the platform app in a timely manner or perhaps leaving a direct phone number for an owner or a property manager. Many STR platforms rank hosts on timeliness of communication because this is a truly vital piece of the hosting puzzle.
“When you first start, you’re just learning and trying to figure it out. What I’ve done – and I have the results to prove it – is I have several messages go out to them that are automatic through the platform that set the expectations when they arrive as well as when they leave,” said Russell.
She explains to guests very frankly this is her livelihood, yet to always let her know how she can make it a “five-star stay.”
“I tell them if you have an issue, please let me know right when you find out so your stay is wonderful and you have a great experience,” Russell said.
Clearly, while there are many things to think about when preparing to get started with short-term rentals, the rewards for both the owner - and the guests - are endless.
