"The best investment on Earth is Earth" – Louis Glickman.
Investing in a rental property doesn't give you the golden ticket to become rich, but it's a lucrative source of passive income worth considering.
Although people make millions in real estate, how much money you can make is dependent on your vacation rental property, how you market it, and the business process you use to ensure your property's smooth functioning.
Irrespective of whether renting a property is a side-hustle or you're planning to pursue it full-time, you need to know ways of making more money from your rental property. Gone are days when implementing late fees and charging for extra bedding were the only ways to increase rental income.
Today, in the ever-changing digital landscape, using the right tips helps you to become a part of a vacation rental market that is likely to boom in the coming years.
With determination and key information up your sleeves, you could be the next mogul for your market.
Let's dive in!
Your rental property doesn't require renovation to boost your income. Small things add up to make a huge difference. Follow these four tips to make more money from your rental property.
Whether you're converting your home into a rental property or a B&B, surviving in the competitive hospitality business without customers' footfall is challenging. With 95% of travelers preferring to book rooms and rental properties online, you need to manage the trend using a channel manager.
But what is a channel manager?
A vacation rental channel manager is a software that allows you to manage and promote your vacation rental properties on online travel agency (OTA) platforms like Expedia.com and Airbnb.
Such software reaches online distribution agents to promote your rental property to guests across the globe. It ensures the availability of rooms is up-to-date even if your guests book through an external website. For example, if your guest uses Airbnb for booking, the same is reflected on your website and other booking channels.
Using a channel manager, you distribute your property across the network of large travel websites, which increases visibility and provides you with more selling opportunities.
Diversifying your sales channels using a channel manager improves revenue and escalates your profits because you always have guests to look after.
Using a channel manager could be a game-changer for your vacation rental business and is the key to earning more money from your rental property.
Pro-tip: When choosing a vacation rental channel manager, look for a 2-way channel as it sends rates, availability, and receives booking confirmation directly in the system.
Mastering the pricing of your property is an uphill battle. Why?
When you price too low, you risk profits, and when you price too high, you risk losing customers.
Don't be among owners who prefer to go without booking for weeks together and fail to reconsider their pricing. As a rental property owner, understand the difference between asking more and getting more. When pricing your property, avoid these three pitfalls to increase your income.
One pricing mistake that reduces your revenue is setting the price based on the competition. A neighboring similar-sized property may have different features and amenities.
They may offer a pool table with a seaside view, whereas your property may provide a homely and cozy feeling. They may have smart locks installed, whereas you still use the traditional lock and key. Because of these discrepancies, the neighboring property may be charging $50-70 extra per night.
When you increase your property rate to match your competitors, you may lose bookings because of the difference in amenities. Therefore, carry out thorough market research before pricing your property.
It's your property, so it's natural to be a valuable asset to you. Pricing based on what you think is the actual value will not attract any travelers. Why?
A budget-conscious traveler is likely to search thoroughly before deciding upon a vacation rental. If they are getting a similar rental property for $200 a night, they will not pay $500 per night for your property even though that's what you determine to be your property's actual cost. Therefore, adhere to the market value and price your property well to make more money.
As a vacation rental property owner, leverage the advantage of dynamic pricing to increase your revenue. Dynamic pricing is a pricing strategy where you charge more because your guests are ready to pay more.
Typically, you charge more during the peak season and charge less when your city has fewer visitors. Furthermore, you can take dynamic pricing one step ahead by adjusting rates depending on how quickly properties near you are filled. If there is a shortage of properties, the dynamic pricing model automatically increases your rental price.
Pro-tip: When you avoid these pricing mistakes and focus on competitive pricing, travelers will likely choose you over your competitors. Striking a balance is difficult but it's incredibly profitable and results in earning more money.
For rental properties, reviews are often the difference between keeping your property booked throughout the year and watching it accumulate dust. That's why collecting travelers’ reviews is imperative and the key to making more money. Why?
More reviews = more bookings.
According to research, 95% of people read online reviews before making a purchase, so displaying reviews increases conversion by a whopping 270%. As more travelers are reading reviews before booking a property, you cannot overlook the importance of soliciting 5-star reviews for your property.
Furthermore, a study by TripAdvisor found that reviews helped 83% of travelers to choose and book the right hotel, and 80% of travelers read between 6-12 reviews before deciding on any rental property.
To increase your booking and ensure profitability year-round, showcase your guest reviews on your website or review platforms.
Reviews also help to build trust and increase credibility because potential guests consider reviews from previous travelers trustworthy and authentic. Usually, travelers confide in your property only after reading reviews.
Whether positive or negative, guest reviews are a great way to learn and understand what's working and where there is room for improvement.
For example, suppose most reviews state that the free Netflix subscription you provide is a fantastic experience, you can capitalize on it and bundle other such amenities to provide experiential value to your guests.
With the growing trend of checking out a rental property and deciding its worth based on the reviews, it's more important than ever to focus on collecting customer reviews.
Pro-tip: Whether negative or positive, always revert to every review as soon as possible. Replying promptly showcases your credibility and indicates that you value your guests.
Allowing pets widens your tenant pool and attracts pet-loving travelers. It can significantly elevate your monthly revenue because many rental properties charge an additional $25-$40 per pet, which adds up to $300-$480 per year for a pet.
Pro-tip: When allowing pets, get an insurance policy that covers pet damage. You may have to purchase a specialized insurance policy to cover the damages.
In the end, earning more money from your rental property boils down to providing the best online and in-person experience to your guests. Every action or upgrade on your property adds up and makes your rental business profitable.
From using the right vacation rental channel manager to mastering the pricing strategy, every action counts. Apart from these four tips, you can add convenience services such as babysitting service, dry cleaning service, or dog-walking service to make life easier for renters.
To further increase your rental income, install smart locks, use smart devices, change air filters regularly, replace old appliances and do everything that makes your property more sellable.
Making money on your vacation rental property doesn't have to be your second job. With the right tips and mindset, it's a rewarding process. Follow these four tips to ensure you always see the 'sold out' board outside your property.
How are you making more money from your rental property? Let us know in the comments section!