Having goals is great and all, but as a general rule of thumb, you need some sort of income to finance them. Whether it’s buying the car you’ve always wanted (and paying off a car loan) or learning a new skill (and taking classes to perfect it), the process of achieving your goals often involves a little bit of extra financial outlay.
So how do you get your hands on a passive income that you can use to fund your goals and give you more financial freedom? Well, you could sell random things online. You could start (another) side hustle. Or, if you own an investment property (and if you’re reading this, we’re guessing you probably do), you could rent it out.
Even if you do not have prior experience in renting out a property, it’s surprisingly easy to become a major player in the short-term rental market. The main thing to remember is to pay attention to how you are maintaining and managing your property so that you are constantly maximising your returns from it.
After all, when you rent out your property, you want to earn more than what will simply cover your mortgage. You want to earn that little bit extra that will be the icing on the cake when it comes to having financial freedom.
In this post, we’ll provide a step-by-step guide to renting out your investment property and (this is the best part) making money from it. The short-term rental market is an incredibly lucrative way to obtain wealth through property, and provided you understand a few key basics, it definitely doesn’t belong in the ‘too difficult’ basket.
Step 1: Understand the short-term rental market
Let’s go back to basics here. A short-term rental comprises a furnished home or apartment for people who are looking for a place where they can stay for a short period of time. Typically, people rent places out on a nightly, weekend or weekly basis.
To ensure your rental will be both profitable and popular, familiarise yourself with the market and inspect other rentals in your neighbourhood. Make sure you look at rates, conditions and any extras on offer. Do this online – although if you want to be super diligent, you can also call a local property manager to get more information.
Step 2: Write a killer listing
Your listing should be a fun, an engaging read, with headlines that persuade a potential tenant that they will have a good time staying at your property. Try to appeal to the imagination of the reader and aim to make your listing stand out. You want people browsing online to be curious enough to click through to your advert and send you a direct message enquiring about rates.
Step 3: Know where to list it
While listing your property on multiple sites can be time-consuming and require a lot of effort on your part, it’s important. Many people skip this part and just list their rental on one or two sites, which is actually a huge mistake.
You want to make sure many potential renters can see your short-term rental property, so you should not just list it on popular sites such as Airbnb, HomeAway, and VRBO. You should also put up your listing on sites like Stayz, CampInMyGarden, CouchSurfing, and FlipKey to get more bookings and find good tenants. Here are more reasons why you should list on multiple sites.
Step 4: Provide a wonderful experience for guests
It may feel costly at first to renovate your place and furnish it for guests, but it will pay off in the long run. You want to make sure your guests have a fantastic stay and will leave a positive review for your rental.
It makes sense to make them feel at home the moment they step in. Talk to them before they even stay at your property and make sure you greet them upon their arrival. Before you know it you’ll become known as a super host!
Step 5: Request recommendations to gain five-star reviews
What your guests say and think about their stay at your short-term rental matters, and can seriously influence the decisions of future tenants. You need to garner as many positive reviews and glowing recommendations as possible in order to stay competitive, regardless if your property is in a main city such as Sydney or Melbourne, or in a more regional part of the state.
The first step is to manage your guests’ expectations right from the very start. Be honest with your description in your listings and treat people like you value them – you do, even if it’s only because they’re bringing you value!
Remember that one of the most important truths for beginners in the short-term rental market is that your first guest is never your last. When you get something right and gain positive feedback, rinse and repeat. Over time, you will develop a successful and highly-structured method of earning money out of your investment property.
While a short-term rental may seem like it is more complicated than other traditional types of renting, it is a way to profit from property without veering towards long-term commitments. The strength of using your investment property as a short-term rental property is that you really can make significant gains – plus it shows higher and more consistent capital growth in the longer term.