Short-term rentals (STR) are today’s biggest open secret in the real estate market. Their recent performance as an asset class has made them one of the hottest commodities on the market: at the end of 2021, the average revenue from STRs that were listed full-time grew to $56,000, the highest level ever. In some markets, it can take just 14 days of occupancy (or less) each month to cover the mortgage payment. These remarkable trends are set to continue into 2022, creating excitement on all sides of the industry. Hosts and investors are excited about the projected 14.1% growth in demand over 2021 levels, while travelers are poised to make the most of Airbnb’s landmark introduction of 100+ new changes–all signs point to one thing: the time has never been better for starting an Airbnb business and joining the fun.
As exciting as all of this is, it can be highly daunting to anyone who is looking to break into the market for the first time. Increased growth and demand mean increased competition, creating a need for newcomers to find ways to differentiate their properties from others available on the market. Self-managing a property is always difficult, requiring lots of time and money to account for all the externalities that come with such high guest turnover, and managing an exceptional one requires even more creativity and effort.
Fortunately, we at Rabbu are leveraging our collective creativity to help streamline your efforts.
The first and most obvious step to starting a lucrative STR business is also one of the most important: selecting a property. Choosing the right property is both an art and a science. You will need a strong, comprehensive business plan that clearly lays out your budget, expenses, and revenue goals. Once you’ve figured out what you can afford, it’s time to make an informed decision about which property you want to acquire–as always in real estate, location is key.
Picking the right location can dramatically increase your rental’s appeal. In addition to seeking out popular locations, it’s important to think about who your potential guests might be and what your property can offer them. Maybe you want your rental to be a home base for adventure-hungry travelers: if that’s the case, you’ll want to choose a location that offers easy access to a variety of tourist attractions and transit options. If you’re interested in taking advantage of the continually expanding consumer base of travel-eager remote workers, you might consider choosing a property in a quieter neighborhood with easy access to parks or cafés, and take care to outfit your property with strong wifi and spacious desks.
Regardless of what your particular vision is, Rabbu provides a suite of PropTech-enabled tools that can help you realize it. Once you’ve established your business plan, our Rabbu Marketplace tool enables you to browse STR-specific underwritten properties and instantly receive a text message or email whenever we source a new property that matches your investment criteria, allowing you to get ahead of the crowd. We also offer a revenue calculator that uses a variety of metrics to provide you with an accurate prediction of the monthly income a given property would generate as a short-term rental.
These tools take the guesswork out of acquiring a property, enabling you to stick as closely to your plan as possible. Once you’ve turned your first property into a thriving getaway spot, it’s time to take that winning plan and expand it.
If acquiring and managing one short-term rental seems, at first glance, to be a difficult process, it seems intuitive that acquiring and managing multiple properties could quickly become overwhelming. As appealing as those revenue projections look, it can be difficult to look past the equally staggering number of cleaning crews you’ll have to hire and guest messages you’ll have to answer.
This is where creating a standardized set of procedures becomes essential. By establishing an efficient system that is able to run on its own without the need for constant tinkering, you can operate multiple properties with the same amount of effort that it would take to operate one–perhaps even less. What’s more, the increased revenue from multiple properties can make it even easier to implement and optimize these systems, creating a kind of positive feedback loop.
As with selecting your first property, being strategic about the locations you choose is key. Beginning your scaling journey by acquiring multiple properties in the same general area reduces the hassle of hiring multiple maintenance crews while also allowing you to make use of your knowledge of the local area to stand out from the competition. It’s also a great way to create a wider client base by serving multiple different niches in the same community.
The real game-changer in this respect is the power of PropTech to automate the more time-consuming minutiae of running a short-term rental. Partnering with a trusted property management partner like Rabbu frees up valuable time in your day. Our comprehensive platform enables automation of nearly every aspect of our host’s business, from creating and optimizing listings to communicating with guests and even hiring maintenance crews. With us taking care of the daily grind, you’re free to take extra time to scale up your vision even further.
In a volatile global market, short-term rentals are one of the most stable and lucrative asset classes you can find. As difficult as it may seem, starting a short-term rental business can be a gateway to once-in-a-lifetime opportunities–just as much as staying at one can be.
If you’re interested in big opportunities, get in touch with us below!
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