Quick Story before we get into the secret stuff..
I once took a phone call from someone looking at buying a vacation home who already owned one. During the conversation we were discussing the annual returns and the caller said to me “I was told I would get $200 per night on average and I only get $130, they told me all sorts of numbers – but I’ll know better next time”.
So I asked where their first property was located and the size and features and when I heard the answer my immediate thought was that if that were my property I would be disappointed if I didn’t generate $250 a night!
One of the most common questions that we are asked is “how much can I get in rental returns a year from my property”.
There is no simple answer to this question because a short term vacation rental is, if you like, a small business. And like any business the success very much depends on the owner and the employees. In the case of a short term rental property that would be you and your property management company.
So the first question that needs to be answered to begin to make a determination of the annual returns are, who are you and who is your property management company going to be?
It is very possible to have two identical houses side by side – one that generates 12 weeks at $130 a night and another that generates 32 weeks at $230 a night. That is not theoretical, that is happening right now – all over the Orlando short term rental area, tens of thousands of homes that are in the program generate different annual returns and those returns are more dependent on the owner and the property management company than the house or the location.
To demonstrate this in a very easy and understandable way lets take two homes, the Smiths and the Jones.
The Smiths purchased a 5 bedroom house in the Sunshine state resort, it was already furnished and with a property management company. They took the property over as a turn key operation and continued to run it as it was.
The Jones purchased a 5 bedroom house in the Sunshine state resort, it was already furnished and with a property management company. They took the property over as a turn key operation and continued to run it as it was but spent $300 getting the property photographed property by a professional indoor photographer and gave the home a makeover by spending about another $2,500 on new bedding and a splash of paint.
It’s your vacation and you are looking for a 5 bedroom vacation home for your family in the Sunshine state resort and you come across the Smiths and the Jones property and the whole family is looking at both options you you look at the photographs to both homes, you see the Smiths:
.and you see the Jones.
90 times out of 100 vacationers are going to book the Jones house. Jones spent some money getting good photographs taken and freshened up the house.
BTW, these are the same home and the same rooms after refurnishing!
The only way Smith is going to get a booking is if he drops his price lower than Jones, and Jones is so overbooked he has to raise his prices.
If you take the photograph example and do all the additional things that can be done to make your property more accessible and more inviting you can distance yourself even further from the competition. The images above are an actual home that has been upgraded and it didn’t look bad to start with – but more importantly your the owner who is pro-active, who understands that some common sense investment and business savvy will pay dividends in the long run.
But I’ve still not answered your question, and that is on annual returns.
Well by rule of thumb a nice property in a nice location with a good owner and a good property management company should be able to secure you at least 26 weeks of bookings a year – or 50% occupancy.
The rate is very much dependent on the location and the property management company – and of course how nice the home is which brings us back to the question of Smith and Jones. And that’s a question you have to answer – you can be either a Smith or a Jones.
The secret to short term rental property and generating the most revenue you can from your property.
- Be an active owner
- Have it photographed and videoed professionally
- Chose an appropriate management company
- Don’t be afraid of resort fees. Chances are you’ll rent for more if you offer more.
- Market to your home town, friends and family.
- List on many vacation home websites. There is a list of dozens of them.
- Furnish it nicely – mattresses are huge – guests will deal with just about anything if they get a good nights sleep!
- Offer entertainment for kids – games consoles are inexpensive and a huge plus. Buy 2!
- Repeat clients are gold – follow up personally and thank them.
- Ask us for more advice on your specific needs. We don’t charge and it’s invaluable!
If you take away discount shoppers you will find that the vast majority of guests will gladly pay more to be assured of an enjoyable hassle free vacation with their family. Successful short term rentals are not about cutting costs by either the owner or the client it is about providing and receiving great service – a lesson lost on many a failed owner.
Our team have a wealth of knowledge we can freely provide you. Please take full advantage, we want nothing more than for you to be successful!
Vacation Home Specialist