The short term rental industry continues to grow, especially after the recent pandemic drove people away from hotels to something that felt a bit safer. And if your STR is in the right place or serves the right people, there are a lot of opportunities for profit.
But any STR business can be successful, if you do it right. That means taking the time to truly grow a business and not simply nurture a hobby.
And, as always, the time to get into the STR industry is #NowO’Clock. Not next week, not when you’ve saved an arbitrary amount of money. It’s now. Because you can’t be successful in an industry where you’re too afraid to commit yourself.
You Hire Help—Soon!
You are the CEO of your business. But are you the chief executive officer or the chief everything officer? It matters!
As the chief everything officer, you’re doing it all--and likely burning yourself out in the process. While it’s typical early in business to do it all (or feel like you have to), it’s not sustainable in the long-term--especially if you want to grow your business.
Instead, we recommend reading the book The Big Leap by Gay Hendricks and finding your zone of excellence. We’re guessing it’s being a visionary for your business. Double down on that and start hiring out the things that are outside your zone of excellence. Cleaning, maintenance, back-end operations, customer support, and marketing come to mind as things you can outsource early in the business.
Know Your Market
One of the very first things you need to do, before you even start your first unit, is know your market and who you’re serving. The best part is that you get to decide this.
Where is your passion? Who do you want to help? Knowing this will help you decide where you open units and what those units look like. A unit that’s specifically for a business traveler might be a one bedroom in a city with a number of large corporations or that hosts conferences and conventions. But a unit for family vacations needs multiple bedrooms and should be located near family-friendly destinations and attractions.
Get Professional Photos
Marketing is key to attracting the right people to your units, and the first thing they look at (after location) is the photos of your property. If your photos are too dark or grainy or they don’t show off the right amenities, you’ll lose your potential guests.
So what should your photos look like? In short, they should look like a professional took them. Because you need to hire a professional to take them. A professional real estate photographer. So many of our students tell us that they can’t afford a professional. I’m telling you that you can’t afford to not hire a professional. Your photographer will know the right lighting, angles, and features that need to be present and you will earn back the investment time and time again.
Lease, Don’t Buy, Your STRs
A lot of new STR operators start because they’ve inherited a home and aren’t ready to let go of it yet. Or they’re thinking ahead to retirement and want to buy a home that they use as a STR until they’re ready to retire. This is all fine, however how you acquire your STRs looks different if you’re going into it with your mind on business.
If you’re strategically and intentionally starting a STR business, we recommend not buying your units--but leasing instead.
We know how this sounds. Renting a house or apartment only to rent it back again sounds counterintuitive. But it’s not. It’s actually incredibly smart investing.
Look at it this way: If you have $200,000 to invest, you could buy a single home or unit for that price. Alternatively, you could also take out a mortgage for that amount. That ties up a large chunk of cash or your investment potential for the term of your 30-year mortgage. If you instead lease a unit, how many units could you pay the first month’s rent and security deposit for that same amount of money? And I promise you that the rent you’d collect from your STR guests will be well over the monthly lease fee as long as you have at least 50% occupancy.
You’re Running a Business, Not a Hobby
Maybe you’re getting into the STR industry because you love to travel and the idea of contributing to hospitality is exciting to you. Or maybe you thought you’d just “kind of play around” with the industry a bit to see if you can make a few bucks.
That’s all fine and good, but don’t expect to be successful or profitable if that’s your mindset. If you want to be successful in STRs, you need to approach it as a business, not a hobby.
Think about the hobbies you have right now--running, cross-stitch, camping, tennis, cosplay. You spend what little free time you have on these hobbies, after you work a long day or long week. It’s important to have hobbies that help you unwind and that you look forward to doing. But if you’re going to turn something like tennis into a business, you need to put in years and years of work and training to earn any money from it.
If you plan to make money with your STR business, you need to treat it as a business. Put in the time and effort. Learn the industry, train with the best coaches, make smart decisions. Only then will you be profitable.Success takes time and it takes being strategic. If you’ve been thinking about starting a short term rental business but are unsure of what to do first (or next), grab the Short Term Rental Blueprint course for free. We’ll walk you through those first steps so you can be on your way to a successful business.