Do you dream of owning a cabin in the mountains or on a lake or a house on the beach? Does running a vacation rental business sound right up your alley? You’re ready to get on this bandwagon but not sure where to start? This is a conversation that’s been on repeat for us over the last few months with friends, friends of friends, and in DM’s on social with online friends – and so, it was time to put our official thoughts here on the blog to help guide those considering a business like ours and provide insights we wish we had known four years ago when we were at the beginning of this journey.
8 things to consider before investing in a vacation rental property:
Know your why.
The first question I always ask when someone is considering a vacation rental is if they are looking to fund a vacation home for themselves or if they are looking to run this as a business and supplement their income. The answer to the question will make the next action steps incredibly different. When we were first starting out, we thought about places we loved like skiing out west or the ocean – but ultimately, we knew we wanted to grow this as a business and switched our property hunt to Door County, a place close enough to home and knew well.
Getting clear on this question is going to drastically change how you approach things and knowing it upfront will help guide your approach. Will you need a property management company to help or are you going to be running the business? What amenities to look for – those that your family appreciates or future guests?
You’re in the hospitality business.
Your success is not just dependent on providing a nice place to stay but rather your ability to create an experience for your guests. Suddenly you’re a travel agent, guiding the itinerary and what to pack and also making sure your space has everything someone would need for their stay from outfitting the kitchen to thinking about extra amenities your guests would appreciate. If this piece lights you up like it does for us, it’s a good sign this business could be a good fit for you.
Know the rules and regulations in your area.
You’ll want to prepare for any liabilities BEFORE you write an offer so there are no surprises. Check out zoning laws and understand if short-term rentals are allowed. See if there are any restrictions like how many nights you’re able to rent, if you need to live close to your rental, any sanitary rules like how many people your place can sleep based on the size of the sewer/septic system, what licenses and permits will you need? What taxes will need to be paid? Should you put your property in an LLC? This is not a reason not to get into the business, there’s risk in everything, the important thing is to do your research and know what you’re getting into.
You’re a marketer.
This is EXACTLY why we got into this business, but it could be a potential deterrent to others, so I want to make it clear how much marketing goes into running a successful vacation rental. From pricing to photos to writing your description to attract an ideal guest and creating a brand to designing a website and implementing a book direct option – there is so much marketing strategy involved when running a vacation rental business and it’s good to know what’s required from the beginning. You’re not just booking a night stay, you’re responsible for marketing and selling your product too. Travelers today are looking to experience a brand – if they only wanted a night’s stay they would have booked a hotel and it’s our job to provide this service as part of renting our vacation homes.
Fixer Upper or Turn-Key?
We’ve had both and there are pros and cons to each. We’ve put our blood sweat and tears into renovating and getting The Point to where it is today and we could not be more proud. But, there have also been weekends where we have pulled out of the driveway and if you had given us a match, we would have considered burning the place down. I tell that to aspiring vacation rental owners because it’s important to know just how much work is involved and most of it is all at once up front in the process and can leave you questioning if this was a good decision. On the flip side, The Bay was pretty much up and running in the matter of two weekends. We had bought the furniture from the previous owners, painted a couple of rooms and adding in decor, and were ready to rock. My point here is to know what you are getting into. Properties like The Point are absolutely worth it, but at the end of the day, ones like The Bay might be a better investment from a business and time standpoint. Again, it’s all about being prepared for these things and learn from our experience.
You’re going to need a team.
No matter how involved you plan to be, you’re going to need a team. Even if you don’t hire a property management company you’re going to need help from a cleaner to plumber or electrician, painter, maintenance to someone available to do the odds and end errands that come up – finding the right team. This is also part of what we love about running a vacation rental because it allows us to invest back into the community we love where our homes are. We make this a priority from choosing a local banker to supporting as many small businesses in anything we buy for the cabin as possible – it’s our goal to rise up and support the community around us.
Be a guest first in a vacation rental.
Another piece of advice I have for those considering this business is to start by staying in vacation rentals. Visit Airbnb’s and take notes on what you liked, what you thought could be improved, and notice how they run things. Looking at things from your future guest’s perspective is going to pay off in terms of creating an experience in your future vacation home and will also provide insights into if this is the kind of business you want to run. It will also help you determine what to look for from a real estate standpoint which brings me to my next point:
The best vacation rental properties have…
Ok, you made it this far. I’m going to assume this list has not only not scared you, but you’re excited and that you’re now ready to discuss what to look for in a vacation rental property. What I tell people to look for when buying: character, unique qualities, and how can you paint an experience for your guests with what’s around the property? Start to write the description and highlights in your mind as you tour and really look at it from a guest’s perspective instead of from a real estate investment standpoint. I knew the second we took the famous windy road to get to Porte Haven and saw the Washington Island ferry going by in front of the cabin that this was going to be a slam dunk in terms of marketing a special place to guests. Keep these things in mind as you tour properties and pull out those special characteristics to help you down the road as you look for guests.
So, what do you think? Is this business for you? Here’s how you can get additional support from us on this vacation rental journey: