6 Best Ways to Make Money with Short Term Rental

Short term rental refers to the rental of a property, usually a vacation home, apartment, or room, for a short period, usually less than a month.

Airbnb, Booking.com, and VRBO are some popular short-term rental platforms.

Short term rental platforms have changed the way travellers think about hotels, vacation homes, and other alternative lodgings.

From Airbnb to VRBO, several companies offer travellers the chance to book short-term rentals at affordable prices. Nearly 30 million people used these services in 2017 alone. 

However, many people aren’t aware that there are different ways to make money with short-term rentals beyond simply listing your property and hoping for the best. There are numerous ways you can monetize your properties through this growing industry. Here are six of our favourite ways to make money with short-term rentals:

6 Best Ways to Make Money with Short Term Rental

The short term rental has become a lucrative business opportunity in recent years, especially with the rise of popular platforms like Airbnb, Booking.com, and VRBO.

Here are the six best ways to make money with short term rental:

1. Rent out a spare room or your entire property: You can rent out a spare room or your entire property to travellers, making it a great way to earn passive income. You can either rent out the space as a whole or just rent out a room.
2. Offer additional services: Offer additional services to guests such as airport transfers, tour packages, or meals to increase your income.
3. Optimize your pricing strategy: Proper pricing is crucial to maximizing profits from short-term rentals. Utilize dynamic pricing techniques, such as adjusting prices based on demand, to make the most of your rental.
4. Offer discounts: Offering discounts, such as early-bird discounts or last-minute discounts, can attract more bookings and increase your income.
5. Utilize high-quality photography: High-quality photographs of your rental property can greatly improve your listing's appeal and increase bookings. Hire a professional photographer if necessary.
6. Maintain a positive online reputation: A positive online reputation is crucial for attracting bookings and increasing your income from short-term rentals. Encourage guests to leave positive reviews and respond promptly to any negative feedback.

Making money with short term rental requires careful consideration of pricing strategies, offering additional services, maintaining a positive online reputation, and utilizing high-quality photography. By following these tips, you can increase your profits and make the most of your short-term rental property.

How do you Profit From Short Term Rentals?

To profit from short-term rental, you can follow these steps:

1. Choose the right location: Select a location that is popular with tourists and has a high demand for short-term rentals.
2. Set the right price: Set the price of your rental based on market demand, competition, and the value you are offering. Utilize dynamic pricing techniques to adjust the price based on demand.
3. Market your property effectively: List your property on popular short-term rental platforms and make sure to have high-quality photos and descriptions. Utilize social media, local advertising, and word-of-mouth to attract more bookings.
4. Offer additional services: Offer additional services, such as airport transfers, tour packages, or meals, to increase your income.
5. Maintain a high level of cleanliness and comfort: Ensure that your property is clean and well-maintained to attract positive reviews and repeat bookings.
6. Keep costs low: Minimize expenses by sourcing supplies and services locally and implementing energy-saving techniques.
7. Continuously improve: Regularly review your listing, guest feedback, and occupancy rates to identify areas for improvement and optimize your short-term rental for maximum profit.

Short Term Rental Hosting

One of the most popular ways to make money with short term rentals is to host travellers in your own home. If you live in a popular travel destination, you may find that travellers are willing to pay a premium to stay in your neighbourhood. This is especially true if you live near a tourist attraction, or if you have a desirable neighbourhood.

As a short term rental host, you have the opportunity to earn passive income by renting out your property to travellers. To be a successful short term rental host, you need to have a property in a desirable location, set competitive pricing, market your property effectively, offer a clean and comfortable space, and provide excellent customer service. Additionally, it is important to comply with local regulations and laws related to short-term rentals.

 Hosting on a short-term basis gives you the chance to earn extra money on your schedule. You don’t have to worry about getting used to a new schedule or finding a new place to live. You also don’t have to worry about finding guests; travellers are actively looking for short-term rentals.

What is a Good ROI on Short Term Rental?

The return on investment (ROI) for short-term rentals can vary greatly depending on several factors such as the location, property type, and pricing strategy. On average, short-term rental property owners can expect an ROI of 4-10% per year.

However, some short-term rental properties in highly sought-after tourist locations can have an ROI of 15% or higher. It is important to conduct thorough research and analysis of the local market and competition to determine the potential ROI for your short-term rental property.

It's also important to consider all the costs associated with running a short-term rental property, including property management, maintenance, cleaning, and advertising expenses, in addition to mortgage or rent payments. These expenses can have a significant impact on your ROI.

Ultimately, the ROI for a short-term rental property will depend on several factors and will vary from property to property. It is best to consult with a real estate professional or financial advisor to determine the potential ROI for your specific property.

What Type of Rental Property is Most Profitable?

The type of rental property that is most profitable can vary depending on several factors such as location, market demand, and local regulations.

However, some types of rental properties that tend to be more profitable include:

1. Vacation Homes: Vacation homes in popular tourist destinations are often in high demand and can generate a high rental income during peak season.
2. Multi-Family Units: Multi-family units, such as apartments or duplexes, can offer a higher rental income due to the ability to rent multiple units at once.
3. Luxury Properties: Luxury properties, such as high-end condos or villas, can attract a more affluent clientele and offer a higher rental rate compared to more modest properties.
4. Accessible Properties: Properties that are accessible for people with disabilities can have a steady demand and offer a higher rental rate.
5. Student Housing: Properties near colleges and universities can have a consistent demand from students seeking off-campus housing.

Monthly Rentals

Rent Your Property Out on a Long-Term Basis: If you live somewhere that’s popular year-round, you may be able to make money with short-term rentals beyond just the standard vacation season. Many travelers are interested in renting long-term properties. 

They may be looking for lower-cost alternatives to hotels and traditional apartments. If you can host long-term guests, you can make money with short term rental beyond the typical vacation season.

How to Make Money With Short Term Rental

Here are 6 ways to make money with short term rental:

1. Maximize Occupancy: By using popular vacation rental platforms, property owners can reach a large audience and maximize occupancy. By pricing the property competitively and providing a high-quality experience, owners can increase demand and generate more rental income.
2. Utilize Seasonal Pricing: Seasonal pricing can help property owners to adjust their rental rates based on demand, allowing them to generate more rental income during peak season.
3. Offer Additional Services: Property owners can increase their income by offering additional services, such as airport transfers, rental equipment, or concierge services.
4. Utilize Smart Home Technology: Installing smart home technology, such as smart locks and smart thermostats, can help property owners to streamline the check-in process, reduce costs, and increase guest satisfaction.
5. Manage The Property Efficiently: Proper property management, including regular cleaning and maintenance, can help to reduce vacancy rates and increase guest satisfaction, leading to higher rental income.
6. Diversify Your Rental Portfolio: Owning multiple rental properties in different locations can help to spread the risk and provide a more stable source of rental income.

It is important to conduct thorough research and analysis of the local market and competition to determine the best strategies for maximizing rental income and mitigating risk. Property owners should also consider all the costs associated with running a short-term rental property, such as property management, maintenance, cleaning, and advertising expenses, in addition to mortgage or rent payments.

Corporate Housing

Become a Co-Host and Share your Short Term Rental: If you want to make money with short-term rentals, you may want to consider becoming a co-host.

This is a particularly good option if you live in an area that’s in demand among short-term renters. To become a co-host, you’ll need to partner with a major short-term rental company such as Airbnb. 

Co-hosts earn money by sharing their home with guests and collecting a portion of the rental fee. For example, if your rental earns $100 per night, you’ll earn $35 per night. Co-hosts have the opportunity to earn a substantial amount of money while sharing their home with guests. If you have the room, becoming a co-host is a great way to make money with short-term rentals while also having a positive impact on your neighborhood.

How to Start a Short Term Rental Business

Starting a short term rental business requires careful planning and preparation.

Here are the steps to get started:

1. Conduct market research: Research the local real estate market, including rental demand, competition, and local regulations. This will help to determine the most profitable locations and property types for a short-term rental business.
2. Choose a property: Based on the research conducted in step 1, select a property that meets the criteria for a successful short-term rental, such as location, size, and amenities.
3. Establish a business plan: Develop a clear business plan that outlines the goals, target market, marketing strategies, and operating procedures for the short-term rental business.
4. Prepare the property: Ensure that the property is in good condition, well-furnished, and equipped with all necessary amenities, such as bedding, linens, kitchen supplies, and technology.
5. Set up online presence: Establish an online presence for the short-term rental business, including a website, social media accounts, and vacation rental platform listings.
6. Develop marketing strategies: Create a marketing plan that includes advertising and promotional activities, such as online marketing, email campaigns, and search engine optimization (SEO).
7. Obtain necessary licenses and insurance: Obtain all necessary licenses and insurance required to operate a short-term rental business in the local area.
8. Hire a property management company: Consider hiring a property management company to handle day-to-day operations, including cleaning, maintenance, and guest relations.
9. Launch and promote the business: Launch the short-term rental business and promote it through advertising, social media, and other marketing strategies.

Starting a short-term rental business can be a profitable and rewarding venture, but it requires careful planning, preparation, and hard work. It is important to conduct thorough research, establish clear goals and strategies, and be committed to providing a high-quality guest experience to succeed in this competitive market.

Conclusion

Last but not least, the short term rental sector is still developing and will experience numerous growing pains. Depending on where you live, the local laws governing vacation rentals and other types of house sharing can change at any time.

You should speak with a real estate attorney before acquiring a property to use it as a short term rental to ensure that such use complies with your local zoning or, if applicable, the rules of the homeowner's association.

Also Read: How To Get a Startup Business Loan?