Elite Hospitality: Earning the Top Titles on Short-Term Rental Platforms

If you’re going to do it, why not try to be the best?

How and Why Major Hosting Platforms Distinguish Their Best Hosts

When consumers shop for items on Amazon, one of the first things most do is look at reviews and star-ratings. The marketplace is full of countless independent sellers, most of which offer items very similar to those of other sellers. So, in order to make sure you are choosing a reputable seller known for good quality, feedback from past customers can be extremely valuable in the purchasing decision. This peer-to-peer review system can instill peace of mind when the shopper adds the item into their digital shopping cart, and can prevent disappointment when the item shows up on their doorstep.

Short-term rental hosting sites like Airbnb and VRBO use similar feedback mechanisms to let others in the market know what to expect – both with buyers (renters) and with sellers (hosts). Post-stay reviews and star ratings can tell others on the platforms volumes about a person’s communication, cleanliness, and overall pleasantness in prior transactions. Taking it one step further, these platforms have quantified a number of key data points associated with hosts’ accounts, and award special “badges” to their listings to let potential guests know that they are the best of the best. Airbnb calls these hosts “Superhosts” and VRBO calls them “Premier Hosts”. I know there are more STR hosting platforms out there but, for this post, I’m going to focus on what I know.

The Metrics

Not surprisingly, Airbnb and VRBO use similar metrics to define their top hosts. There are slight differences, however, in the specific data used in their calculations for awarding the top-titles.

Airbnb

Airbnb uses 4 criteria to evaluate hosts for Superhost status, and they do so on the first day of each quarter of the year. To get the Superhost badge, each of the following criteria must have been met during the 12 months leading up to the review date:

  • Average overall rating of 4.8 or higher (Average guest review of home on a 1-5 star scale)
  • Response rate of 90% or higher (Responding to customer messages and booking inquiries)
  • 10+ completed stays or 100 nights over 3+ stays (Shows that you have remained active in the past year)
  • Cancellation rate less than 1% (Don’t cancel bookings already on the calendar)

VRBO

Similarly, VRBO does host reviews every quarter, looking at each host’s performance over the previous 12 months. However, unlike Airbnb, you may earn the Premier Host status as soon as you achieve the following 5 criteria, even if it’s before the review period ends:

  • Booking acceptance rate of 90% or higher (Declining a booking request lowers your acceptance rate. I have mixed feelings about this metric)
  • Cancellation rate of 5% or less
  • Average overall rating of 4.3 or higher
  • 3 or more reviews on the platform
  • 5 completed bookings or 60 booked nights

The Benefits

Sure, having the title of “Superhost” and/or “Premier Host” is cool and may help you sleep better at night, but what do you really get in return for your hard work?

Airbnb

  • Yearly $100 Airbnb coupon (For maintaining the status for a full year)
  • Promoted to guests (Through marketing emails and ads)
  • Potential guests can filter on Superhost listings (And why wouldn’t they want the best?)

VRBO

  • Potential guests can filter on Premier Host listings
  • Improved search result position
  • Priority support for issues (24/7 access)

PLUS, elite hosts have the ability to demand higher prices for their listings than hosts without the special badge on their account. How much higher is something you’ll need to research in your particular market but, the idea is simple – A higher quality product can ask for a higher price.

Wrap Up

There are plenty of reasons to shoot for obtaining the various platforms’ “top host” designations. The requirements discussed in this post aren’t abstract or nonsensical. They all come down to being a courteous and responsive host to your guests and providing an attractive product to the marketplace. These are principles to build your business on, with or without the “badges” that these platforms provide for instilling them. Receiving the email from Airbnb telling me that I had reached Superhost status was so fulfilling for me. It solidified for me that hospitality may truly be my fit. I had quickly become obsessed with my STR business and now I had obtained reinforcement that I was doing a good job with it. I still have plenty to learn and will continue doing so. As always, I will keep sharing those learnings here with you.

Thank you for taking the time to read what I have to say on the subject.

Happy Hosting!

Depth or Breadth? Deciding Whether to Expand to a New Market

At the time of writing this post, I find myself with a hunger for another property and a bank account that might even be able to satisfy that hunger. My routine this year, since starting my short-term rental journey, has been somewhat of a copy-paste technique within the same city. I have two houses in the same small town and, with it, a rhythm and pocket of comfort. I understand the market and have resources in place that make replicating my investments a relatively easy thing to do. So, when I started fantasizing about the idea of investing in a whole different state, I became torn in two directions. Do I keep going with the area I understand or venture out into the unknown and try my hand at an interstate venture? I hope this post serves both as an informative article for you in your own STR investment career and as a way for me to think-out-loud through the decision, looking at the pros and cons of each path. Let’s get started.

The Niche I Know

The adorable, small town I chose for my first two investment properties has served me well. I have enjoyed getting to know the area and building a trustworthy team of resources around me to help run the show. Here’s a pros-and-cons list of adding my third home to this market:

Pros

  • My fantastic cleaning professional has the bandwidth to take on another home.
  • My agent has my back and has become a good friend I can trust.
  • The proximity (1.5 hour drive) to my home gives me peace of mind, in case I ever need to make the trip.
  • I know there’s a market for short stays here.
  • I am building a reputation in the community for doing what I do well. Strengthening this with another home could be beneficial.
  • Real estate prices are lower (~15%) than in the alternative city.

Cons

  • I risk potential market saturation. What if I’ve tapped out the market?
  • All of my eggs in one basket could mean trouble if the city ever makes rules against STRs or the area becomes undesirable.

Venturing Into The Unknown

The new city/state that caught my attention isn’t completely foreign to me. My brother lives in town, which is what gave me the idea to consider it. Here’s what I like and dislike about investing here:

Pros

  • Interstate experience. This move would force me to practice more truly remote management. It’s further away, but not too far for the occasional weekend trip. Getting confidence with investing in a new state will open me up for endless new markets.
  • I will have a new place to stay. A big draw for me to the STR world is the fact that I can use the homes for my own vacations if I desire.
  • This city brings more revenue potential. Looking at the Airbnb trends in the area, the home I’m considering would likely earn double what my current market does. It is a big city with multiple major events every year.
  • The property taxes are lower in this city.

Cons

  • This is an unknown market for me. I will need to do a lot more market research to understand how to price the home throughout the year.
  • I will need to start from scratch assembling a team of professionals I can trust; including a cleaning crew, maintenance professionals, and a lawn-care service.
  • It is not as easy to get to in the case of an emergency.
  • This particular city is more prone to parties and events, requiring greater due diligence to protect my home.

So, What To Do?

Obviously, some of these items pulling me toward either market are specific to the areas in question. The home values, property taxes, big-city party potential, and revenue expectations in the two markets are all things that are relevant particulars in my scenario, but may vary in your own decision-making process. Nevertheless, it is important to take these things into consideration. Other features in my lists are universal pros and cons to venturing into any new market.

Ultimately, I could justify going either direction. Based on my own vision for my business, I have decided to move into the new market for my next investment. I want to challenge myself with the experience of hosting a short-term rental home in a new city and in a new state. The revenue increase and new vacation location for myself will be worth the uncertainties of the market, extra setup work, and occasional long drive. The pros outweigh the cons for me, though they may not have for you while reading. That’s okay – We are all crafting our own journey here. If you feel I missed any key considerations for either avenue, please leave a comment!

As always, thank you for reading and happy hosting.

Starting a Short-Term Rental Business…Without Owning Any Real Estate

Get cozy! We’re talking about making money.

If you ask people who want to get into real estate investing, but haven’t, for the biggest hurdles stopping them from getting in the game, most will probably mention the capital investment. A house is expensive, no doubt, and exploring loan options can be extremely complicated to even experienced investors. While there are financing options that allow for 3% or less as a down payment for a property, these options may not work for you. You may not qualify for loans like these, for a number of reasons we won’t discuss here. Or, you may not have the savings required to provide the calculated down payment plus the closing costs for the loan, not to mention any updates or repairs needed once you get the keys. Oh, and since you want guests to stay in the house, you need enough money leftover to furnish the place. Whatever your situation may be, you don’t need to let the financial burden of real estate ownership deter you from getting into the hospitality business. With a model called rental arbitrage, you can run your short-term rental business without owning the home at all.

What is Rental Arbitrage?

Arbitrage, simply put, is the economic practice of taking a resource from one market, where it has a certain value, and offering it into another market that values it higher. That difference in value is translated into profit for the person orchestrating the deal. In real estate for rental purposes, let’s consider 2 markets: long-term rental and short-term rental.

The Long-Term Rental Market

This is your classic rental home – whether it be a house, apartment, or condo, the leases are signed for an extended period of time. The agreements are usually for a 12-month period but landlords may offer 6-month or even month-to-month lease agreements to tenants.

The Short-Term Rental Market

This is why you’re here on my blog. The short-term rental market is that of a hotel; people looking for a place to stay for a period of time as short as one night. This isn’t a home, it’s a short stay to get the tenant close to whatever it is that brings them away from home and into the area. For a comparison of the financial implications of renting in the short-term rental market versus the long-term rental market, check out this article.

Now that we have an understanding of the difference in cashflow of an LTR versus an STR, this is where the arbitrage comes in. By taking a resource from one market (a long-term lease contract) and plugging it into another market (renting the home on sites like Airbnb) you can take advantage of this profit potential without having to own the home! You rent it…and then you rent it out. By paying the monthly rent to a landlord and then hosting the home as a short-term stay, you’re able to pocket the difference.

Why Wouldn’t the Owner List the Home on Airbnb Themselves?

  1. The work. Managing guest communication, coordinating cleaning schedules, furnishing the home… It takes more work to manage a short-term rental!
  2. The uncertainty. Many old-school landlords have been doing things the same way for a long time and it’s working.. Why would they change their strategy? They may not even understand the way the technology works.
  3. The risk. Many landlords see the venture into short-term rentals as risky. The potential for more damage and uncertain occupancy rates are scary ideas to many homeowners considering this strategy. Plus, depending on the type of property, the landlord may be looking out for the best interests of other tenants living in close proximity, protecting them from a continuous flow of strangers and parties in the building. As I’ll explain, it’s your job to make it clear to the owner that you are the one taking on, and mitigating, these risks.

How to Land a Rental Arbitrage Deal

What to look for

You can’t just sign any year-long rental agreement for an apartment and assume you can start listing it on Airbnb. Most traditional rental agreements don’t allow this type of sublease. You definitely don’t want to get caught renting the place out illegally and then find yourself stuck with multiple months left in a rental agreement. So, here are some key factors to look for to start your search prepared.

  1. Talk to the owner. A property manager or real estate agent you message through Zillow is likely to shut your request down right away or is not going to portray the opportunity in the most positive light to the owner. If you can find an owner renting out their home via listings on Facebook or Craigslist, you’ll have the best chance of making a personal connection with them and sealing the deal.
  2. Houses over apartments.
    1. Apartment units are going to be the toughest to get into the rental arbitrage game. These are often owned by corporations who don’t have time or interest in hearing about your “win-win opportunity”, and they also will be extra weary of the potential for rambunctious vacation renters throwing parties and disturbing the peace of the nearby residents. This goes for apartment complexes of all sizes, as well as homes that have been converted to multifamily structures.
    2. Condominiums are easier than apartments for this endeavor because they are individually owned, giving you a chance to get in contact with the owner directly. However, the owner may still have the issue of shared walls and friendships with neighbors to protect. Plus, HOAs may have lines in their bylaws that prohibit short-term renting of the units. Be sure to check the bylaws if you get to that point with a condo.
    3. Stand-alone houses are your best bet. If you can speak with the owner of a house, they will likely have less worry of disturbing neighbors. And, by promising to rent out the entire home, you may be taking a large financial burden off of them and their mortgage payment.

Selling it

So…you’ve got the owner of a home on the phone. Now, what do you say?? Because we know the apprehensions that may keep a homeowner on-edge when they think about the STR world, we can prepare for their concerns and ease their minds with a few important selling points. Whether it’s over the phone or in an email, mention the following positives about letting you rent their home out on a short-term basis:

  1. Represent your business and your customers the right way. Instead of saying “I want to rent your house on Airbnb”, say something like “My company offers short-term housing for individuals visiting the area for work and for play”. Mention the different attractions and events that may be bringing someone to the area for a weekend. Get creative but be sure to sell yourself as a professional who provides a service.
  2. Move-in ready at all times. Because you will be bringing in new guests repeatedly, you will always have the house first-impression ready. You can check out this article on the benefits of short-term rental practices in terms of wear-and-tear on a rental property.
  3. Professional cleanings regularly. Similar to point number 2, homeowners can take comfort knowing that their house will be cleaned thoroughly between each guest. That means no year-long manifestations of filth, like they may have encountered after a long-term tenant moved out at the end of a lease.
  4. You make money, so they make money. Stress the fact that, because this is a business, you plan on always having money for rent. You don’t need to hide the fact that you will be making money on this transaction – It may give them comfort in knowing that they will be paid each month.
  5. Maintenance and lawn care. This can be a huge selling point, depending on the homeowner’s original intentions in the long-term agreement. By promising to handle all lawn care and minor maintenance issues inside the home, you may take a big burden off of their shoulders in terms of both effort and finances. You ultimately become the property manager for the home.
  6. Potential to grow. If all goes well, the relationship between yourself and the homeowner may bear fruit in the form of more homes to rent. They may own several homes already, or they may decide to invest in more homes now that they have such a reliable partner. This one comes with time but can really lead to scalability in your business.

In Conclusion

Getting into the short-term rental business without owning real estate is not simple, but it sure is possible. Be prepared to hear “No”…a lot… in the beginning. With the right research, presentation, and reputation, you may find it getting easier and easier to land rental arbitrage deals as time goes on.

Why STR? Comparing Financials (and Work) of Long-Term and Short-Term Rental Strategies

You’ve got a living space you want to rent out..now what? The long-term rental option sounds like a simple way to go; find a tenant, sign a year-long agreement, and let the cash roll in every month. But now you’re considering this whole STR thing…and I’m glad you are. In this post we’ll break down the difference in return possible from a short-term rental vs. a long-term one, and the work required to get it.

The Profit Potential

It should be no surprise that the nightly rate in a short-term rental is higher than the nightly price of a long-term lease agreement for the same property. People pay a premium for the convenience of being able to reside in a place for a few days, whether it’s for vacation, business, or personal reasons. Plus, the homeowner is taking a risk by having more renters coming in and out of their home and expects to be paid for this risk. Many STR owners say that they expect 2-to-3 times the income of a traditional rental strategy.

Example

One of my rental homes is in an area where the monthly rent I could charge is probably $825 at the time of writing this post. In this model, I would leave the tenant in charge of all utilities; gas, electricity, water, and internet service.

Now, using the home for short-stays, my nightly rate averages out to $120. I expect an occupancy rate of 65% of the year (there are sites like Airdna that can help you estimate your occupancy rate and average nightly billing rate). This brings the average monthly revenue of the home to $2,372.50. Subtracting Airbnb’s 3% fee brings us to $2,301.33. Of course, keep in mind that we pay utilities for the homes in this model. My monthly utilities are averaging somewhere around $350 per month, bringing my takeaway to $1,951.33 per month, on average.

“But what about the cost of regular cleanings between guests?” I knew you were going to ask that. If you’ve stayed at an Airbnb an paid attention at the time of booking, you likely noticed a “cleaning fee” line item. This fee is used for, you guessed it, paying for the home to be cleaned after your guests check out. Now depending on the price your cleaning service charges you (all the cheaper if you’re doing the cleaning yourself) and the acceptable cleaning fee rate for the area, you may even be able to make profit from the fee you charge your guests. I have heard stories of people doing just that. Some break even. Some have to shell out a little extra to cover the difference for each stay. For this example, let’s assume we break even with cleaning fees.

This same home, which would have brought in $825 per month as a long-term rental, is bringing in an average of $1,951 per month as a short-term rental property. That is 2.4 times the monthly income, or $1,126 extra per month. Now, of course, a long-term tenant offers a little more comfort to the owner – You know you have heads-in-beds every night, generating you money. The 65% percent occupancy that I used in my example is just an estimate – It may be higher some years and it may be lower in other years. The STR business has a higher risk and, as we’ve learned, a chance for higher reward.

Note: I didn’t mention lawn care in my service calculations for the STR because the owner likely would pay for this service in either model. So, in comparing the 2 options, I decided to ignore it.

What Effort to Expect

You can see how the short-stay strategy can make for a lucrative investment. But, with all of those people coming and going, how much extra work should you plan to put in on maintaining your business?

Furnishing

In another post, I explain how I get this done quickly.

Guest Communication

You’ll want to thank your guests for choosing your place for their trip. Then, you’ll need to tell them how to check in, share recommendations for the area, instruct them on how to check out, and then remind them to leave you a review…and repeat these every time somebody books your home. Several guest touchpoints should be part of your hospitality gameplan. In a future post I’ll add more detail on my communication strategy and even share tools that you can use to automate the touchpoints.

Cleaning

A thorough cleaning of virtually every surface in the home is necessary, especially in today’s fixation on germ safety. Right now, people want to be assured that their retreat is one to a sanitized environment with no trace of contamination from other living beings…I definitely recommend hiring a professional for this but you’re certainly welcome to take on the cleaning process yourself. Finding a cleaning company or person in your area that specializes in quick turnaround for a short-stay business, is a task in itself.

Paying the Bills

Autopay, autopay, autopay. Right off the bat, I put all utilities on autopay. I don’t want to have to think about logging into different websites every month just to pay the bills. Do yourself a favor and automate these payments right away. Check in every now and then to make sure you aren’t being charged any unusual amounts – You may find a mistake or an opportunity for energy efficiency upgrades to the home.

The Takeaway

Is the extra return on a short-stay investment worth the extra work? For me, the answer is a very clear YES. This may not be the case for everyone. You need to consider the following:

  • Long-term rent rates vs. short-term nightly rates in your area
  • How much time you have to dedicate to an STR strategy
  • The resources available to you (cleaning professionals you can trust, property management companies in the area, etc.) that may make one strategy more convenient for you

I hope you found this post useful. As always, feel free to contact me with questions or suggestions for future posts.

Happy hosting!

Rethinking Real Estate: Remember Who You’re Shopping For

In the home buying process, it’s easy to let traditional values dominate your intentions. I remember my parents’ advice during the purchase of my first (primary) home. The typical mindset in a real estate transaction revolves around maximizing the resale value of the home; specifically how valuable the property is to a family unit. It’s important to remember, however, that your goal is not to move a family into their forever-home. While many of the attractive features of a family home remain attractive for a short-term rental, there are certainly differences. Knowing what to focus on – and what to ignore – can help you make the best use of your time and money. In this post I’ll talk about how, by keeping your customer in mind, you may find you’re able to find excellent investments in homes that others may pass right by.

Property Particulars – What we’ve been taught to look for in a home purchase

Here are several classic “must-haves” that were drilled into my head during my search for my primary residence. When I later switched my sights toward attracting guests to my short-term rental properties, I realized that these important features I had been taught really weren’t so important.

Number of Bedrooms

I was always told that houses with 3 or more bedrooms were best for resale. In fact, I was advised to completely ignore 2-bedroom houses. Even though I was a single guy with no intentions of having a family in my first home, I was supposed to plan ahead and accommodate a traditional family of 2 parents with 2.5 kids. 2 bedroom homes would perform poorly in the market when it was time to sell.

I identified 2 main issues with the bedroom count argument when looking for my first short-stay home. First, being a cash-flow investment property, I didn’t really care about how desirable the house would be for the next buyer. Second, given that the average Airbnb party is 2-4 guests, it makes sense that a 2-bedroom home actually makes the most sense. A queen bed is usually enough for 2 guests to stay comfortably, and most renters are happy to save money by doubling up. A third bedroom may actually turn this average-sized group off, due to the feeling of spending money on a room they don’t need. I actively search out houses with 2 bedrooms for my STRs and I’m surprised at the deals I’m able to find with these overlooked homes.

A Garage

If I were buying for myself, there’s no doubt I would prioritize a garage in my search. Even when unattached, a garage gives a cozy feel – A safe place for your car to rest while you settle in after a day of work. Or, maybe a workshop for handy projects, a “mancave”, or a home gym – Not to mention all of the storage space a garage offers.

Of course, guests staying for a couple of days aren’t going to set up a gym or a home theater while they reside in an Airbnb. They aren’t going to bring with them a lifetime of clutter and seasonal clothing that needs to be stored away. And, they don’t need a garage for their car. They need a place to park. They need a safe place to park their car that is close to the home so that they can easily get their bags inside and get to and from their car for the days’ adventures. A driveway would be just fine in most areas. Even street parking would please most guests, if the neighborhood is perceived as safe and the street not excessively busy. According to Airbnb, free parking is one of the best amenities a host can promise guests. So, if your house doesn’t have a driveway, be wary of promising availability of street parking. You may want to mention the uncertainty in your listing description.

A Good School District

I don’t need to spend much time on this one.. It is well known that a school district can make-or-break a home purchase decision. A house’s location is pretty much the only thing that can’t be changed about it. Lucky for you, your short-term guests won’t be staying long enough to need to enroll their kids in class. So, they don’t care about the schools.

Peace and Quiet

When searching for my primary, it was always a big no-no when I’d arrive to a house showing appointment and could hear even the softest rumbling of traffic on the nearby highways. Of course, anybody looking for a place to come home to after a long day of work, repeatedly for the next 10+ years, wants to find solace and serenity in their abode. They come home to get away from the noise.

While peace and quiet is a valuable selling point for some short-term rental locales boasting remote exclusivity or beautiful views of nature, most guests staying for a couple of days in your rental home won’t mind – or likely even notice – the buzz of traffic or nightlife. In fact, if you read my earlier post about choosing a location, close proximity to major roads can actually be an attractive feature for potential guests. People traveling for work, events, or family in a nearby busy city will want quick access to the action.

To Wrap-Up

If you’ve been paying attention, you may have had a lightbulb go off in your head or dollar signs in your eyes… I hope you did. The main takeaway here is that many of the features (or lack thereof) that make a home undesirable to the traditional buyer, and therefore cheaper in the market, may provide you the perfect opportunity to swoop in and get a great value on your short-term rental property investment.

Compare the Wear-and-Tear: Are Short-Term Renters Rougher On Your Property?

I can still hear my mom’s response when I told her my intentions of hosting guests on a short-term basis rather than a typical 1-year lease term.

“Vacation rental? All those people coming and going? They’ll wreck the place!”

My mom’s argument was the same one many people have when comparing these two rental strategies. She saw the rapid rotation of short-stay guests as a recipe for faster property depreciation. Rather than see the place as “home”, short-termers (rapid renters, as I call them) may not treat the house with respect, but with a “not my house, not my problem” attitude that will lead to carelessness and damages. While her logic made sense on the surface, I have actually found the opposite to be true. In fact, because of the nature of the short-term stay and the platforms that make it possible, I trust my assets in the hands of short-term renters much more than those of long-term tenants. In this post I will explain what I mean.

The Tenant-Landlord Relationship

The Typical Lease Term

In my experience renting 1-year apartments, I saw the landlord/staff on three occasions per lease in my unit; at the beginning of the lease, the end of the lease, and on the few-and-far-between instances of mishaps that were severe enough to warrant a maintenance call. “Severe enough” is important to note – I wasn’t calling maintenance to patch a small hole or inspect a spot of mold in the shower. The “it’s just a rental” mindset was in full effect and I only blew a whistle when I felt that my standard of living was hindered or that my rent money was being squandered by negligent upkeep.

When damage was my own fault, I certainly avoided telling the property manager, and the risk of losing my security deposit was usually so far off in the distance that it dampened the urgency for action on my part. At this point, it’s likely easy to imagine how year-to-year renters can lead to deprecation of a property at a noticeable rate.

Renting in The Short-Term

At the other end of the spectrum, the interaction between the rapid renter and the home owner (or property manager or cleaning professional) is just as regular as the guest turnaround. When a guest checks out after their weekend stay, my cleaning partner is in the door within the hour to get the house ready for the next guest. Part of her process, of course, is to be my eyes – Inspect the condition of the property and its furnishings and ensure nothing is out of the ordinary. This both makes sure the place is ready for the next guest and, by doing this thorough inspection between each guest, it allows me to pinpoint the culprit of any guest-caused damages. Then, I can file the appropriate claims with the listing platform, if necessary.

The Nature of The Short Stay

When going on a quick trip – whether for work, play, or personal reasons – staying in and making yourself at home is not usually the main item on the agenda. There are things to do, people to see, and foods to eat. Though the front door may get a workout, many of the amenities of the home will likely see less use. Most of my guests don’t touch the oven, open the windows, or spend much time sitting on the couch watching TV, for example.

Social Feedback and The Digital Reputation

A huge motivator in all aspects of life is how we are perceived by others. Social media and the internet have, of course, amplified the extent to which others can judge us..

Airbnb and VRBO, like many other marketplace platforms, encourage the rating of the people with whom you have recently done business. Following a checkout, both the host and the guest are asked to review their experience throughout the transaction, letting others on the platform know what to expect when interacting with this individual (each not being able to see the other’s review until theirs is complete, to avoid retaliation). Fear of a bad review can make even the rudest homeowner a pleasant host and, similarly, the slobbiest vacationer a fantastically clean guest. If a guest causes damage to my house, and my cleaning lady reports it to me, it has just put a blemish on their online reputation, hurting their chances of being accepted as a guest by a future short-term host.

But What About Parties?

It’s true – Many people search out Airbnb properties with the intention of throwing parties – drinking, playing loud music, and cramming many more people into the home than are allowed in the listing. While this is certainly more likely to happen in some areas than in others, it’s important to be aware of the risk and the things you can do to prevent it.

Of course, you should say “No” when the platform asks if events are allowed in the home when setting up your listing. It should be no surprise that this rule might not be enough to deter a group of college kids on Spring break… Luckily, there are a few other measures you can take to protect your property.

Companies like Noise Aware have created devices that monitor the noise level in a space. These gadgets are small, sleek, and usually plug into an outlet. They alert you if they detect noise elevating to boisterous levels. If the levels stay up long enough (or late enough) to cause you anxiety, you can call the guests to inquire about their activity and ask them to be courteous. Feel free to blame it on a “call from a neighbor” if you don’t want to seem like “big brother” (though I believe you do need to disclose any monitoring devices in the listing). You can buy yours here. This monitoring gives you the additional benefit of staying on the good side of the neighborhood, preventing complaints to the city about the “party house on the block”.

Doorbells with cameras integrated in them can offer a way to see who is coming and going, right from your phone. While you cannot put cameras inside the home to watch your guests, you can find out if a zoo of people is at the door, allowing you to shut down a party before the first keg stand. Ring offers a few options.

Conclusion

Every real estate investment includes some kind of damage risk and it is important to be prepared, both financially and emotionally, to handle the upkeep and unexpected maintenance of your property. However, it is my strong opinion that the argument of many (my mom included) that short-term rentals lead to more damage than long-term rentals is misguided and mitigated via the reasons in this post.

Stocking up: Inventory Management in Your Short-Term or Vacation Rental Property

Last night I got my first “I think we’re short one ‘X'” text from the woman who cleans my two (at the time of writing this post) rental properties. I then spent far too long anxiously fixated on how this guest, the first one to stay in my second STR home, had wronged me, and how the supposed theft of this single bath towel would surely be my mind’s main obsession for the foreseeable future… Dramatic, I know. I woke up this morning in a much calmer state of mind, knowing that this is just part of the job of a short-term rental manager and grateful to have this experience under my belt. In this post I’ll discuss how I handle inventory management in my rental properties so that I can be as prepared as possible for future texts like that one.

Methodical measures

My cleaning professional is amazing. She is the perfect partner to have when managing a short-term rental; extremely diligent and timely with an obsessive attention to detail. One thing she does when she is finished cleaning after checkout is take inventory of all necessities. This includes cleaning supplies, laundry items, consumables, and tableware/cookware – making sure the amount of each item is equal to the amount we need. ‘The amount we need’ is either the amount we had before the last guest (for laundry items and tableware/cookware) or enough to last the home for the comfortable future (for cleaning supplies and consumables.)This inventory investigation is something I include in the cleaning checklist I write for her for each property, which I’ll talk more about in a dedicated post. So, when she noticed one of the bath towels missing, it was a red flag that told her to text me immediately.

Let’s look at each category of household necessity, and how I manage it, more closely –

Inventory mindset by category

Your strategy for managing these categories of goods – and even the categorization itself – may very well vary from the way I do it. Good. You should formulate a strategy that fits your personal situation. The idea is that you have a documented and intentional plan for making sure your short-term rental (or vacation rental) home is fully stocked with what it needs for a great guest experience.

Cleaning supplies

When I told my cleaning pro that I was ready to have her do the initial (pre-listing photo) cleaning of my first STR home, she followed up with a long list of cleaning supplies for me to buy. Honestly, I wasn’t sure if I’d have to buy cleaning supplies or if that was part of the deal of paying for a cleaning service. I learned that it’s pretty standard to supply your cleaning person with the supplies they need. We’re talking about sponges, gloves, rags, and dozens of chemical formulas. It was overwhelming, how many things I needed to buy (especially since my personal home’s main form of cleaning every surface was Clorox wipes…) so I made sure to get large sizes of everything. There’s value in being lean – keep your cash liquid by only supplying small amounts of supplies – but that only makes sense if you live very close by your rental property. My 1.5 hour drive to mine isn’t terrible, but it certainly isn’t something I want to do every week to buy a new bottle of Windex or pack of Magic Erasers. So, I try to stock these up with a 6 month supply, with my cleaning professional giving me a heads up when levels get somewhat low. She knows I don’t live super close so she is sure to give me updates on the stockpile as a whole so I can make the most of a supply run.

Laundry items

Here, we’re talking about all things that go in the washing machine; things that will be used again and again, barring any unresolvable soiling:

  • Bedding (sheets, pillow cases, comforters, blankets)
  • Bathroom towels (body towels, hand towels, wash cloths)
  • Kitchen towels (hand towels, dish rags)

For all of these items, I am always prepared with backups. You do not want to be caught in a situation where a guest has pooped on the comforter and there’s a back-to-back check-in happening in just a few hours.. I’m sorry to be graphic but I need to make a point! 2 of everything here. So, for example, I plan to have 4 body towels available to guests in my first rental, which accommodates 4. Using this rule of doubles, I will always have 8 body towels on hand, keeping 4 of them on reserve. The same goes for every other item in the list above.

*Bonus* By having doubles of laundry items, you also may allow for more flexibility in your cleaning process. Rather than having to rush to throw laundry in the washer as the first item on the to-do list, in hopes that it will have time to be dried and staged before the next guest checks in (or necessitate another visit just to put sheets on), having doubles allows you to ready the home with set 2 while set 1 finishes drying. This has saved time in my cleaning process tremendously.

Consumables

“Consumables” does not just refer to things you may offer to eat or drink for your guests. Think – anything that they use once and must be replaced when gone – is a consumable. To come up with a complete list of consumables, spend a couple of days taking notice of the things that you use that make you comfortable in your home. These may include:

  • Toilet paper
  • Paper towel
  • Hand soap
  • Dish soap (you may have considered this in “cleaning supplies”)
  • Body wash, shampoo, and conditioner
  • Batteries in the remote
  • Aluminum foil, plastic wrap, wax paper, etc. (if you choose to provide these)
  • Salt and pepper
  • Condiments
  • Coffee and tea
  • Coffee filters
  • Whatever other creature comforts you may want to offer to guests

For these items, the mindset is similar to that of the cleaning supplies – you want enough for the next guest and at least the next few. But, especially in the case of things that may expire like condiments and coffee that can go stale, you don’t want an overwhelming amount taking too much space. Since I don’t provide any real perishable consumables, I shoot for a 6 month supply, again with my cleaning pro helping me restock before we get too low.

Tableware/Cookware

Plates, bowls, cups, coffee mugs, and silverware are pretty straightforward. I aim to provide enough for each potential guest, plus one or two extras in the cupboard. Plates don’t break too often but it’s good to be prepared when they do. Luckily for me, many places sell “seating for 6” packs and both of my rentals offer space for 4 guests at a time, so these are perfect.

Just like with consumables, it may be helpful to pay close attention to the tools you use in the kitchen for a week; pots, pans, spatulas, wooden spoons, mixing bowls, can openers – More things than I can even think of right now. It really takes active “living” to remind yourself all of these mindless, no-frills tools we use everyday. Your guests will need these as well. Now, you certainly don’t need to be prepared with two of each of these things. One should be fine. On the off chance that a guest snaps your spatula, you can either decide to make the trip to replace it immediately, or let guests go pancake-less until it’s convenient for you to replace it. It likely wouldn’t be the end of the world.

My cozy kitchen. Isn’t she cute?!

Protecting your provisions

In all but one of the above categories, I mention how important it is to have backups. As much as we like to think our guests are sweet and loving angels who would never take more than their fair share of your kind hospitality, it’s important that you keep these spare supplies hidden from them. Only you and anyone you let manage your property should be able to access the area where you keep the extras. In my houses, I have turned either the basement or a hall closet into a supply area, which is protected by a latch and key which is hidden and only available to the crew.

I really tried to lay out some intimate details of my operation in this post. I hope you found some value in this. If you did, please be sure to follow for more updates!

Thanks for reading and happy hosting.

My Two-Week Turnaround – Getting Your Rental on the Market ASAP

Assuming you intend to make money with your short-term rental business, it should go without saying that every day unrented is missed opportunity for your home. In the case of a new home purchase, that timer starts the minute you gain access to the house (preferably at closing). In the past 3 months I have completed the close-to-listing process with 2 homes, and am really finding ways to move faster and faster through the setup, furnishing, and listing processes so I can start making money on new investments as soon as possible. In this post I’m going to lay out 3 critical elements which I have adopted in my practice to get my rentals making money quickly. Hopefully this will help you put heads in beds quicker than you would have thought possible.

Tip 1. Don’t Wait Until You Get the Keys to Get Started

Just because you can’t get in the house before closing, it doesn’t mean you can’t get started on your new investment. After having seen the home during your initial visit and then again during your inspection, there’s no doubt you’ll have an idea of the basic things you’ll need to buy in order to furnish the place and equip it for living. Even if you’ve forgotten the color of the walls in the second bedroom or the number of cabinets in the kitchen, you can-and-should get started shopping while you await the final transfer of ownership.

Now, if you’re saying to yourself “Where am I supposed to keep this stuff in the meantime? I don’t have the storage space necessary for a whole second home’s worth of stuff!”, don’t worry. Thanks to the logistical wonder of sites like Amazon (Prime 2-day shipping especially..), I was able to time my checkout to allow many of my items for my second rental to be delivered the day of closing. In fact, when I met the seller at the title company to sign the documents he opened with, laughing (and probably annoyed), “You got a few packages today, huh?” When I showed up to the house, I saw the mountain of 19 boxes sitting on the porch, ready for me to get to work as soon as I turned that key for the first time.

Of course, this shipping shortcut isn’t for everybody – If your new rental is an apartment unit or in an area in which you wouldn’t feel safe leaving packages on the porch for even a day, consider making room at home while you shop and then cram that car full or borrow a truck on the day of closing. In another post I’ll talk more about what to buy and where to buy it… as local thrift shops will become a lifesaver for many essentials for your new short-term rental.

Tip 2. Time Your Closing Intentionally

This step is going to seem a little nit-picky – a little anal – but when you desire your turnaround time to be a matter of weeks, or even days, every hour counts.

My second rental is in the same area as my first – a little town an hour and a half north of my home. Knowing that my weekdays were very preoccupied with my day job and the business I run afterhours, I knew I needed to make the most of my weekends to get this place ready. With a few weeks before closing, I told my real estate agent that I wanted the closing date to be on Friday, preferably in the early morning. By making the declaration early in the process, my agent was able to ask the seller’s agent and the title company if they could accommodate my timing, rather than the other way around.

With everyone onboard with a Friday morning closing appointment, I was then able to spend the entire weekend working my butt off to get the house rent-ready. This allowed me to be incredibly efficient with my time, all while only taking one day off from my day job and sleeping in the bedroom which I was sure to get bed-equipped as my first chore. At the end of that weekend I had the place extremely close to picture-ready. All I needed was the following weekend for finishing touches. Thus, my “two-week turnaround” benchmark was born.

Tip 3. Understand Lead Times for All Projects

This last tip is something engrained in my brain from my experience and schooling in the art of project management. It’s pretty simple, though – if something takes a long time, get started on it first. This is especially true for anything that you will be hiring-out. Say your inspection indicates the need for a roof repair. You don’t know much about fixing a roof, but you know it’s the largest project that needs to be done. You call the local roofing company right away and they indicate a 1 week timeframe to get your job done. You’re bummed by the delay, but you’re glad you didn’t wait to make this call. With a nod back to tip 1, you may even call the roofing company right after the inspection to inquire about the lead time, rather than wait until the house is “yours”. While you wait out this lead time, you can get to work on the other tasks that require your attention.

In another example, one big undertaking during my first rental purchase was trying to answer the question “Who is going to clean the house between guests?” Knowing that cleaning a hotel-like atmosphere with short guest-to-guest turnaround times would require a special type of cleaning professional, I got started on my search as soon as I knew the deal wasn’t going to fall through. It took multiple calls and a thoughtful screening process for me to find my perfect cleaning partner. By starting on the most challenging feats first, you give yourself the best chance of not letting hang-ups delay the launch of your rental.

Wrap-Up

The three things discussed in this post, along with an obsession with this endeavor, allowed me to turn a house into a home in two weekends’ time. My next goal is to shorten that to a one-weekend turnaround. I’ll be sure to share with you any new tips that help me get there. If you have any other best practices that have helped you hurry toward hosting, let me know in the comments! Thank you for reading.

Change the Way You Think About Short-Term Rental Destinations

If you asked me a year ago to list the areas of the country where short-term rentals thrive, you might as well have asked me to list where I would like to vacation; places near the ocean, places near mountains, and a couple big cities. I’m not alone. “Short-term rental” is a term often interchanged with “vacation rental”. I attribute this mindset to the relative newness of the industry, in terms of popular attention in the digital age. When Airbnb was started in 2008, the whole idea was shocking and whimsical; you go stay in someone’s home, in a residential area with all of the creature comforts of a “local”.

It was so different than the way my family had always done things. When we traveled to see family down south, we’d stay at the Holiday Inn nestled between the McDonald’s and the greyscale office buildings on the busiest (and most unappealing) road in town. Hospitality was a corporate business, done by companies whose job is to cram bodies into rooms – rooms that all look the same and make no effort to be a memorable part of your trip. Airbnb challenged this idea with their original slogan “Travel Like a Human”. By allowing people to rent personal spaces owned by individuals and families, it enabled completely unique and intimate experiences that immersed renters in the lifestyle of a location, rather than just giving them a place to stay. Travelling, for lack of better words, sucked less…and really became fun.

While travel has become more fun, when you’re considering starting your own STR, remember that fun is not the only reason people travel. Here are some of the reasons my guests have stayed in my first short-term rental during the first 3 months of operation:

  • Funeral of a friend
  • Coming back to visit their hometown
  • Temporary housing for a work assignment
  • A place to stay for a night during a cross-country road trip

If you want a quick litmus test for whether or not your area might be a good fit for an Airbnb listing, ask yourself these questions:

  1. Are there hotels in the area? Big hotel chains don’t just set up shop anywhere. If there is a hotel in the area, it is likely because of trends in travel; whether for work, pleasure, or other reasons.
  2. Am I near a popular destination? While your town might not have a big, sexy name, you may be able to provide “close enough” housing for people looking to travel to that big-name city or destination at a much more affordable price. When searching on a map, budget-conscious individuals are likely to look around the perimeter of where they really want to go. Rather than take it as an insult to your small-yet-spectacular city, consider it an opportunity to capitalize on the sky-high rates in hot zones.
  3. Why would I want to come here? With some introspection you may remember the campground down the road from your house, the big barbecue festival every Summer, or the local college whose football team has a cult-like following. You might gain some confidence in the profitability of a short-term rental and a greater appreciation for the area.

So, why did I choose the location I chose for my first 2 STR houses? I chose the quaint Michigan town for a few reasons. First, there are 2 hospitals in the area, and I thought traveling nurses and doctors would appreciate a cozy home more than a stiff, boring hotel room after a long shift. Second, this adorable little city offered a touristy vibe only a 1.5 hour drive from my home, making it accessible in case of emergency (while I’m new to this, I enjoy the comfort of feeling close to my rentals). Add in cheap real estate prices in the area and a cute real estate agent friend I knew in town, I was tunnel-vision focused on this area.

In summary, don’t feel like short-term rentals are only for the flashy vacation destinations with household city names. With a little research you and some customer empathy, you may discover that there’s money to be made with STRs in even the unsexiest of towns.

*BONUS* Check out the airdna.co to check out trends and revenue forecasts for short-term rentals anywhere and everywhere.

Come On In

Hey there. My name is Phill and I’d like to welcome you to my blog. Younger me never would have guessed that those words would ever leave my fingers. I’ve always loved writing but I never knew what exactly I enjoyed writing about, and I certainly never figured it would be in blog form. But, with an attention span too short for a book and too much to talk about for Tweets, I recently realized that blogging was the perfect avenue for me to talk about my passion for hospitality and my journey of building a short-term rental business.

First, I want to preface this entire endeavor with the point that I am not an expert in real estate, hospitality, or short-term rentals. Do you see how I bolded and italicized that? Because I need you to know that before we start diving in. I am learning this industry along with you, with an insatiable desire to continuously improve, absorb, and share my findings with you.

While I’m not an expert in short-term rentals, I do have some experience under my belt. With my second short-term rental (or “STR”) investment property just days from hitting the market at the time of writing this post, I am looking forward to using my foundation of experience as the springboard for this blog. When I learn something interesting about how to improve my STR business, I’m going to try my best to share it with you.

I manage my rental properties part-time, on the side of my full-time job but, if I’m being honest, it has my full-time attention most days. I have always loved hosting people; parties, small get togethers, and one-on-one hangouts – I enjoy making people feel comfortable and welcomed. When I discovered that I could make MONEY doing this….. I was all in. The goal is to keep learning and growing my little business past the point at which I am able to call it my “full-time” gig. I am excited to share this journey with you. I hope you learn something from my failures, successes, and experiences. Be sure to leave comments on this and future blog posts with anything you’d like to teach me and other readers as well.

Happy hosting!

– Phill