While extra money is always nice, it is more important than ever in Australia. The country has avoided a recession longer than any other country in the developed world, but many economists state its time is coming , and when it arrives, it is not going to be pretty.
For some Australians, it’s not even about a potential recession. They’re already living it. A survey found that 1 in 8 Australians don’t have the money to pay their electricity bills . Others are struggling to meet the monthly demands of mortgage payments, household bills, and living expenses.
Regardless of the financial squeeze you face, it could be eased with some smart home rental changes. With the short-term rental market growing rapidly, led by Airbnb , you can now earn additional rental income by renting out your property in shorter stints.
If you do this well, you can bring in enough money to pay off your mortgage, or send your child to the university of his or her choice. You can build up savings for traveling abroad, or use the extra money to pick up another investment property. In fact, you can use the money for anything that you want. But what if it doesn’t work out? What happens if your short-term rental strategy ends up burning out and you don’t make the money you need to?
Keep reading to discover how we doubled the rental income of a property in Surry Hills over a six-month period… But first, let’s take a look at the important differences between short and long-term rentals.
Long-Term Vs. Short-Term Rentals – What’s the Difference?
If we asked you the difference between long and short-term stays, your answer would probably be simple.
“ Long-term renters stay longer than short-term renters. ”
That is true, but it’s only half the story. As a business model, it makes more sense to go with short-term stays.
Why? First, you have to look at the money. While long-term renters have this perception of “stable” income, you can actually charge more money for a short-term stay.
For our test case the property owner had been charging $520 a week when he rented the property out as a long-term rental. We were able to charge $130 a night for the short-term rental, and bumped that up to $180 a night on the weekend.
Think about how much of a difference that is. When that property owner had a long-term agreement, the most he could make was $520 a week. That ballooned to $1010 a week by switching it to a short-term strategy. If you rent out your home to short-term stays, you’ll also save on fees. With this business model, you don’t have to pay letting fees, posts and petties, or lease preparation fees.
Of course, short-term stays don’t come without their challenges. Keeping your property filled all year round is more of an ongoing process, rather than a “set and forget” situation. However, the more renters you have, the more reviews you get, and eventually the machine starts feeding itself.
For some, this initial instability presents an uneasy feeling, but if you’re willing to take a small risk up front the rewards are significant. Speaking of rewards, let’s take a closer look at the results from our short-term stay test case.
We conducted our experiment using a simple five-step process, which I will show you in a moment, from January to June 2016.
The test property had been occupied by long-term renters for a six month period prior to this experiment, between January and June 2015.
- For the six months as a long-term rental, the property owner made $12,249.
- For the six months as a short-term rental, the property owner made $22,561 .
During that time, there was only a seven-day period where it wasn’t booked. And it is now pre-booked for six months into the future, with the exception of a 14-day period.
Let’s look at the process we used to get these results.
Some people overcomplicate their rental strategy and they empty their bank accounts on marketing and property managers. What we discovered is that a simple five-step process is all it takes to get results when it comes to short-term stays.
Step 1 – Go to Airbnb
For our case study, we used Airbnb. This is one of the best sites for advertising and filling short-term rentals. When we were ready to start our study, we found a place on Airbnb with a rental gap. A long-term renter had just moved out, so this gave us the opportunity to test our theory that short-term rentals could bring in more money.
We couldn’t just change the rental type and expect results, though. We had to craft the right type of profile.
The profile has to look enticing or people will move onto the next one.
Photos are the most important aspect of your profile. You need to take professional grade photos of all of the available spaces.
Get a minimum of two angles per available space, and try to get every nook and cranny so people can envision themselves in the property.
Make sure the photos flow and tell a story as well. The photos should be like a photo journal, taking people on a tour of the home.
Here’s an example from one of the properties we manage:
Be sure to snap any available amenities your rental has.
For instance, if you have an espresso machine, get that in the picture. You never know when a coffee-loving traveler might see your photo and book your space because of it.You also need to write a killer description.This begins with the headline. Choose one or two unique points and highlight them in the headline.
For instance, is your apartment within walking distance of the city? Put it in the headline.Are you located on the coast?That makes a great headline too.
If you don’t have a special location, think of something else that you have to offer. Maybe your home is quiet or cozy. Add it to your headline.
Then, you need to write the body of your listing. Some people prefer to write it in story form, while others prefer to write it in lists. Go with your strengths.
It is important to note that you need to be honest. As much as you want to sell, you need to be upfront if it gets noisy or if the bedroom is small.
People are going to leave reviews, and you want to be upfront to avoid negative ones. Positive reviews will take care of your marketing for you. If you’re upfront and honest, it will be much easier to get positive reviews.
Step 2 – Prepare Your Property
Once you submit your listing, the real fun begins. Now it’s time to prepare your property for your guests.
This starts with a thorough cleaning. If you are born to clean, you can handle this on your own, but if not, outsource this task.
If you have any hazards, you need to take care of them as well. A broken step or some loose wiring could result in a lawsuit. Get them fixed before your first renter arrives.
While the workmen are taking care of the loose step, take a few minutes to lock up your fine jewellry.
You’re going to have a parade of renters coming in and out of your home. Most will be good people, but it just takes one bad apple in the bunch to spoil the entire barrel.
Then, create a guest guidebook. This guidebook should contain all of the information guests need to know while staying on your property.
- Wi-Fi password
- Appliance information
- How to use the remote
- Emergency numbers
- Your cell number
Include some information on local attractions as well.
Step 3 – Nurture Your Guests
Anyone can get a single short-term renter, but if you want to get multiple short-term renters you need to nurture your guests.
Nurturing your guests makes them advocates for your property. They become your biggest supporters, which in turn makes them advertise your rental for you.
Nothing is as powerful as word-of-mouth advertising. In fact, 74% of consumers report that word-of-mouth advertising plays a role in their purchasing decisions.
If you’re going to get those important recommendations, you have to lay the groundwork by nurturing your guests.
The nurturing process begins with the first communication. You need to be responsive to every inquiry.
Forgo the formal tone and keep it friendly and light. You want potential guests to feel comfortable from the get go and this will let them know that you have a nice, easy demeanour.
At the same time, you will show them that you’re reliable by answering all communications quickly. When you finally secure a renter, you’ll be ready for the next step of the nurturing process.
You’ll need to meet the renter in person, whether you are sharing a space or the person is renting out the entire property.
Meet your guest at the front door with a smile, and help them bring their bags into the home.
Then, give the guest a personalised tour of the home, making sure to let them know that you want them to feel at home during the stay. The more personable you are during this tour, the more comfortable and nurtured your guest will be.
Then, point your guest to the guidebook and provide some in-person recommendations for local attractions. Act as a tour guide to ensure that your guest has a great time in your city.
Consider taking it a step further by offering to arrange tour bookings. The more you can handle for your guest, the more positive they will feel about the experience.
When they go into the bedroom, they should find a personal gift, such as a nice bottle of wine with a note. Extra touches make guests feel special, and that is the key to getting positive word-of-mouth advertising.
Finally, leave guests to their own devices and let them enjoy the stay.
Step 4 – Encourage Reviews
You have laid the groundwork to get amazing reviews, and now you need to finish it off by asking for them.
This is where a lot of people get stuck. They don’t want to ask renters for reviews.
Don’t be afraid to ask for them directly. Most people are happy to leave a positive review if they have a positive experience. They just need to be reminded.
Start the process by writing a review of your guest after they check out. In many cases, this is all a guest needs to be prompted to write a review.
Follow that up with a thank you note to your guest, asking for a review. If that doesn’t work, send a follow-up message asking for a review. Some guests simply won’t leave reviews, but most will, as long as you do a great job of nurturing them. Building a list of positive reviews is the most effective way of re-booking your property.
Step 5 – Prepare for a Re-book
Once one guest leaves, you need to get everything ready for the next guest. This is like a cycle. Go through the process of cleaning, restocking the amenities, and getting the booking in order once again.
While this might seem tedious, it is well worth the effort. You don’t want to cut any corners, and you don’t want to be slow about it. If you do this correctly, your rental will stay full from one night to the next.
As time goes on you will know if you have been a great host when the same person books again and again. Like Alethea and Alasdair did with our test property:
Short-term bookings provide financial results that you cannot get with long-term stays.Charging $130 a night and $180 on weekends is much more profitable than charging a weekly rate of $520. In addition, avoiding costly fees helps property owners make bigger profit margins.
Maisonnets makes it even easier to make short-term rentals profitable.
We are a premium short-stay property management service. We provide homeowners with tailored and stress-free solutions to build successful and rewarding growth in their properties.
With a ‘Your home is our home’ philosophy, we take existing property management initiatives and expand them through a white glove experience that is value-adding for both guest and property owner alike.
We take care of everything, from the professional pictures, to meeting and greeting your guests. We can even provide amenities and follow up with your renters to encourage reviews.
But perhaps the most powerful feature of our service is that we sync your listing with over 50 other booking platforms (not just Airbnb).
This makes it much easier to keep your property filled and your renters happy.
Find out more about listing your property with us here.