Short Term Rental is NOT Real Estate, it’s…
I’ve been in real estate for a long time..
I own multi-family properties and have done different land deals.
About two and a half years ago, I decided to try short-term rentals.
And I thought that short-term rentals were a good play.
Because I’ve owned long-term rentals, and they have decent profit margins but short-term rentals like Airbnb, have the potential for much higher profits.
However, there’s a big catch.
You never know what you’re going to get and bookings can be unpredictable.
You never know any of those things when you do a short-term rental.
So here’s what we did.
We bought a lake home not too far from our house because I’ve always wanted a lake home.
“Let’s buy this place” and what we can do is we can rent it out when we don’t need it.
This is a legacy property. This is not an investment property.
We’re not looking to make money. We’re not looking to make a cash flow out of it.
But obviously, we want to make money to pay for itself.
But it’s a legacy property for us at the same time.
Meaning, I want to have this home in our family for generations to come.
So we get into the short-term rental space.
The lake home needed a lot of work. We bought it at a great price, but we had to renovate the whole property.
Here’s what I have come to conclusion..
That short-term rental is not Real Estate.
Short-term rental is HOSPITALITY.
A lot of people might disagree, but the short-term rental market has changed significantly. It has become flooded with people buying units, listing them on Airbnb, and hoping to make money. While this is great in many ways, it has also raised the bar for what guests expect from their stays.
With so many properties available, the competition has forced hosts to step up their game. It's no longer enough to just provide a place to sleep. It has caused them to move into being more hospitable and creating an experience.
So if you watch any short-term rental movies or videos on YouTube, you’ll see that hosts are adding various amenities.
Think about what you get when you stay at a nice hotel. You're treated well, the room is clean, and there are various amenities like a gym, breakfast, and more. This is hospitality at its finest. Whether it’s the Ritz or an all-inclusive resort, these places know how to wow their guests.
This level of hospitality is exactly what the short-term rental market has evolved into. Hosts need to provide more than just a bed; they need to create an experience that impresses their guests. People want to be wowed, and they expect a variety of amenities and thoughtful touches that make their stay special.
Walcox Point Welcome Package
The first way to impress your guests is with the views and the initial “awe” experience. When they arrive, they want to be amazed by the location, the appearance, the furnishings, the beds, and how well-equipped the place is. People expect a short-term rental to be nicer than their own home because they’re paying a premium for it.
To continuously wow your guests, you need to keep adding things to enhance their experience. This is crucial for staying competitive in the short-term rental market, in order to elevate the bar.
Now, here’s what you have to do with short-term rental. You need to actively listen to guest feedback and make improvements based on their suggestions.
Here’s a great example, at our home at Walcox Point, a guest mentioned it would be nice to have a table and chairs on the porch. Did not think much about it the first time someone said something, but after the 3rd time, we added them. While you can’t implement every suggestion, you can certainly add some things. And so we try to pick and choose the things that we know we can add and enhance the guest experience.
Practical Tips:
Focus on First Impressions: Ensure your property looks stunning both inside and out.
Landscaping makes people feel special - The grounds need to look well maintained.
Smell - What does it smell like when you first walk in? A lot of hotels and mega churches use scent machines. They plug them into the wall and add a scent to the machine and it makes the place smell magical. The scent is a powerful thing. Getting a scent that is pretty unique to your space will create memories in their mind.
Listen to Feedback: Pay attention to what guests are saying and act on valuable suggestions.
When something is mentioned 2-3 times, you need to listen.
Prioritize Upgrades: Select improvements that will have the biggest impact on guest satisfaction.
A fire pit, for example, is a great memory maker. We provide wood, a fire starter for convenience, and even marshmallows, graham crackers, chocolate bars, and skewers for making s'mores. YES, this is an added cost, but it's minimal compared to the value it brings to the guest experience.
Managing a short-term rental can be a little bit difficult because sometimes it can get overwhelming. There are so many details to handle, and it can be challenging to keep up.
One of the first things we realized is the importance of using third-party travel agencies like Airbnb, VRBO, HomeAway, and Booking.com. These platforms are essential for getting initial visibility and bookings. You’ve got to get to where people are coming to your website.
I took inspiration and copied a little bit of what this guy does, at Live Oak Lake in Waco, Texas. This guy named Issac built Scandinavian-style homes at Meadow Lake and said he was doing good. Initially, he relied on Airbnb, but when his listings were shut down, he realized the importance of having his own website.
So what he started doing is he started building his social media presence and directed traffic to his website. By focusing on his own brand and hospitality, he ensured guests would book directly through his site as opposed to going to Airbnb.
What we need to do in short-term rentals is take guests who book through Airbnb or VRBO and convert them to booking directly through our own website.
That's why it's crucial to have a back-end website that can collect all the necessary information, such as names, emails, and phone numbers.
And you need to remarket to those people through email and text marketing because, if and when they come back, they can come back through your website.
I'll give you a great example.
Over the next four weeks, People will pay about $15,000 to stay at our place at Walcox Point.
I'm missing about $3000 of that because it's going to Airbnb.
Now. I get it. I wouldn't have those people if one for Airbnb, but I also don't want to have to pay them. So what my job is, is to convert that group to come to my website when they decide they want to come back to stay with us.
The next thing is you've got to create a space that is fresh and new. And I say that is, how can we get the property and the place that we have, grown and be developed to what we wanted?
This is why it takes time.
Number one, because you've got to develop your guest list. It takes time.
Number two, because you've got to develop the grounds, that sounds simple, but the grass and the flowers and things like that, that stuff doesn't pop up overnight. And so you need months years and time of growth.
The first year of a short-term rental, you are learning.
The first year of a short-term rental is:
Number one, learning about your client, where they're coming from, and figuring out how to target that market, whether it be Facebook ads or Google Ads.
Number two, you've got to develop the property. You've got to add different things.
We had an influencer come in and stay with us. Well, she's coming back like five months later to stay again with her family.
We've added $60,000 worth of stuff. We've added a seawall, we've added a new dock, we've added a new path.
The Dock
We've added all these different things to our property just because of time and development.
Any dollar we take in, it goes right back out to
A. Pay the bills.
B. Facilitate our property.
To sum up, here are a few key lessons we've learned.
Firstly, properties take time to develop and grow. Be patient and understand that you need to grow into your property.
Secondly, continually show appreciation to your guests. Send them updates, and leave thoughtful touches. For example, we provide a care package with board games like Twister. At our lake property, we leave marshmallows, graham crackers, chocolate bars, and skewers for s’mores. These small gestures, which don’t cost much, can make a big impact. Guests walk in and feel delighted by these surprises.
Consistently add these thoughtful touches to enhance the guest experience. My spouse sometimes feels we do too much, but these details make the experience wonderful.
Short-term rental is not just about real estate; it’s about hospitality.
Think about places like Doubletree, where guests are welcomed with a scrumptious warm cookie. We need to create similar experiences for our guests to make them want to come back and tell others.
You need to facilitate reviews by giving and receiving good ones. Encourage reviews because they matter to potential guests. Always ask for feedback, and use the term "constructive feedback" to invite honest opinions. This helps you improve and shows guests that you care about their experience.
If you're considering a short-term rental, know that you’re getting into hospitality, not just real estate. It’s about providing exceptional experiences.
Lastly, if I were to buy another short-term rental, I’d choose a destination I’d enjoy, like a beach, lake, or ski resort. This way, it’s a place my family and I can enjoy when it’s not rented out.
Thanks for reading!