9 First Year Mistakes Short-Term Rental Investors Should Avoid

Key Takeaways:

– The author started hosting on Airbnb to offset their mortgage and eventually started a property management company.
– Nine mistakes the author made in their first year of hosting are outlined.
– Mistakes include relying on DIY photos, relying too heavily on automated pricing, not listing on multiple platforms, not staying informed about regulations, not considering all expenses, having unappealing interior design, being ambiguous about guest rules, lack of communication with guests, and underestimating the workload and responsibilities of hosting.
– Solutions are provided for each mistake, such as using professional photos, manually adjusting pricing, expanding listing presence, staying informed about regulations, managing expenses proactively, making appealing interior design choices, establishing clear house rules, maintaining communication with guests, and embracing the demands of the hospitality industry.

BiggerPockets:

Three years ago, I opened the doors of my guest room to travelers on Airbnb to offset my mortgage. What started as a way to supplement my living expenses evolved into a passion for creating 5-star guest experiences and led me to start Stay Peachy Homes, a short-term rental (STR) property management company that helps homeowners and investors maximize their property’s performance and remove the management hassle.

However, like many first-time hosts, I made my fair share of mistakes in that first year. These errors not only taught me valuable lessons but also helped me fine-tune my approach to managing short-term rentals.

Here are nine big mistakes I made during that initial year, as well as insights on how you can avoid them to ensure your own STR venture is a success from the start.

1. DIY Photos

One of the earliest mistakes I made as an STR host was relying on my own photos instead of professional images. In a market flooded with competing listings, using low-quality images may significantly affect your bookings. 

Potential guests often scroll through countless options, and it’s the eye-catching photos that catch their attention and drive bookings.

Solution: Use a professional photographer

Invest in professional images that make your listing stand out. Professional photos can highlight the charm and appeal of your space to attract more potential guests and increase bookings. 

2. Relying on Automated Pricing

I relied too heavily on automated pricing provided by the hosting platform. Initially, I believed that these automated pricing algorithms would optimize my rates for maximum bookings. However, I soon realized that this approach often left money on the table, as the automated prices provided by the platform tended to be significantly lower than what similar properties in the area were charging. 

It’s crucial to understand that while automated pricing can be a helpful tool, it may not always align with the true market value of your property.

Solution: Manually adjust your pricing

Consider manually reviewing and adjusting your pricing to ensure it reflects your property’s unique features and current demand in your area. Finding the right balance between automation and manual intervention can lead to more competitive rates and increased revenue for your short-term rental.

3. Not Listing on Multiple Platforms

With my first short-term rental, I exclusively relied on a single platform (in my case, Airbnb) because I initially believed that platforms other than Airbnb weren’t worth the effort. 

However, I soon realized that this strategy limited my property’s exposure and potential bookings. By solely depending on one platform, I missed out on the opportunity to market to a broader audience and offset times when my property wasn’t booked on Airbnb. 

Solution: Expand your listing presence 

Expanding your listing presence by leveraging multiple platforms like AirbnbVRBOBooking.com, or others can significantly increase your property’s visibility and potential bookings. While it may require additional management efforts, you may benefit from reaching a wider audience and reducing dependency on a single platform.

4. Not Staying Informed About Regulations

When I first started hosting, there were no specific regulations in my city, but my homeowners association (HOA) had its own rules that I had to follow. Over the past three years, my city introduced new regulations for short-term rentals. 

While I was well aware of these changes and able to adjust accordingly, this serves as a reminder that staying informed about local regulations is crucial for every host.

Solution: Stay informed and be prepared to adapt

It’s crucial to always stay informed about local regulations. Regulations can change over time, and what was acceptable when you started may no longer be the case. Be proactive in checking for updates in your city’s regulations, and make sure your property complies. Additionally, be prepared to pivot your hosting strategy if regulations change unexpectedly.

5. Not Considering All My Expenses

With my first short-term rental, my primary goal was to offset my mortgage payments. Profitability wasn’t at the forefront of my mind. However, when I took the leap into acquiring a stand-alone short-term rental investment, I overlooked certain operating expenses in my overall profit calculations. 

Elements like replenishing supplies, furnishing, and maintaining the property needed more consideration. As I transitioned from viewing short-term rentals as my side hustle to treating it as a full-fledged business, I realized the importance of a more comprehensive financial plan.

Solution: Proactively manage your expenses

Manage your expenses. Create a comprehensive list of potential operating costs and incorporate these expenses into your budget and pricing strategy to ensure profitability.

6. Unappealing Interior Design

While a unique interior design can set your property apart, it can also be a hindrance if not executed thoughtfully. I vividly remember a time when I decided to paint my living room a loud, unconventional color, thinking it would add character. 

However, this choice turned out to be a deterrent for potential guests, and bookings were scarce. It was only when I toned down the color palette and aimed for more universally appealing decor that I saw a noticeable increase in bookings. 

Striking the right balance between uniqueness and broad appeal is crucial to attract a diverse range of guests and maximize your occupancy rates.

Solution: Make your interior design captivating

Strike the right balance between unique interior design and broad appeal. Reflect on your decor choices and their potential impact on potential guests. Consider seeking the expertise of a professional designer to help you infuse personality into your space while appealing to a diverse range of guests.

7. Ambiguity Around Guest Rules

In my early hosting days, I assumed that guests would naturally understand what was expected of them. However, this assumption often led to misunderstandings, and I found myself addressing issues that could have been avoided with a well-defined set of rules. 

For instance, there was a time when I failed to specify that for guests staying more than 30 days, I only provided a starter pack of toiletries. This resulted in a guest expecting me to purchase their additional toiletry supplies when they ran out.

Solution: Establish and communicate house rules to your guests

Establish a comprehensive set of house rules for your property. These rules should cover important aspects like check-in/check-out procedures, toiletry provisions, parking instructions, quiet hours, smoking policies, and any specific guidelines related to your property. 

Once you have these rules in place, make sure to communicate them clearly to your guests, both before booking and upon arrival. Providing this clarity not only helps guests understand your expectations but also ensures a smoother, more enjoyable stay.

8. Lack of Communication With Guests

I always made an effort to greet my guests upon arrival and ask them how things went during check-out, assuming this was sufficient. However, there was an instance where I failed to maintain contact during the guest’s stay. While they still left me a kind review, the guest left feedback mentioning an issue during their stay that I could have easily addressed had I been more attentive. 

The bottom line is that guests are not always going to proactively share with you the negative portions of their experience, but they will leave it in their review!

Solution: Check in with your guests during their stay

Make a practice of maintaining open communication with your guests throughout their stay. It doesn’t have to be intrusive, but a simple message to check if everything is going smoothly or offer assistance can go a long way. By staying attentive and connected, you can address any concerns promptly and ensure a positive guest experience, which often leads to better reviews and repeat bookings.

9. Underestimating the Workload and Hosting Responsibilities

As I made a deeper commitment to hosting guests, I quickly realized it goes beyond just providing accommodations. Successful STR hosts understand they’ve entered the hospitality industry, where guest satisfaction is based on much more than a place to stay. 

STRs involve a commitment to maintaining a high-quality guest experience, managing bookings, ensuring cleanliness and property upkeep, and promptly addressing guest inquiries and needs.

Solution: Embracing the demands of your STR and the hospitality industry

It’s essential to acknowledge and embrace the demands of the hospitality industry within short-term rentals. Recognize that hosting requires consistent effort and dedication to ensuring guest satisfaction. Consider whether you have the time and resources to manage these tasks efficiently or if it’s worth delegating some responsibilities to professional property managers, cleaning services, and other vendors. By understanding the true nature of STR hosting as a hospitality endeavor, you can create memorable guest experiences and sustain a successful STR business.

Build long-term wealth with short-term rentals

Vacation rentals can be an extremely lucrative way to boost your monthly income—but only if you acquire and manage your properties correctly. This ultimate guide to analyzing, buying, and managing vacation rental properties will set you up for immediate success and long-term wealth.

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.

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Property Chomp’s Take:

Three years ago, I decided to open up my guest room on Airbnb to help offset my mortgage. Little did I know that this decision would not only turn into a passion for creating exceptional guest experiences but also lead me to start my own short-term rental property management company called Stay Peachy Homes. Along the way, I made several mistakes as a first-time host, but they taught me valuable lessons that have helped me fine-tune my approach to managing short-term rentals. In this article, I will share nine of the biggest mistakes I made in that first year and provide insights on how you can avoid them to ensure your own short-term rental venture is a success from the start.

The first mistake I made was relying on my own photos instead of professional images. I quickly learned that in a market flooded with competing listings, using low-quality images can significantly impact your bookings. Potential guests often scroll through countless options, and it’s the eye-catching photos that catch their attention and drive bookings. The solution to this mistake is simple: invest in professional photography. Professional images can highlight the charm and appeal of your space, attracting more potential guests and increasing bookings.

Another mistake I made was relying too heavily on automated pricing provided by the hosting platform. Initially, I believed that these automated pricing algorithms would optimize my rates for maximum bookings. However, I soon realized that this approach often left money on the table. The automated prices provided by the platform tended to be significantly lower than what similar properties in the area were charging. The solution to this mistake is to manually adjust your pricing. Take the time to review and adjust your rates to ensure they reflect your property’s unique features and current demand in your area. Finding the right balance between automation and manual intervention can lead to more competitive rates and increased revenue for your short-term rental.

When I started hosting, I exclusively relied on a single platform, thinking that other platforms weren’t worth the effort. However, I quickly realized that this strategy limited my property’s exposure and potential bookings. By solely depending on one platform, I missed out on the opportunity to market to a broader audience and offset times when my property wasn’t booked on Airbnb. The solution to this mistake is to expand your listing presence. Leverage multiple platforms like Airbnb, VRBO, Booking.com, or others to significantly increase your property’s visibility and potential bookings. While it may require additional management efforts, you may benefit from reaching a wider audience and reducing dependency on a single platform.

Staying informed about regulations is crucial for every host. When I first started hosting, there were no specific regulations in my city, but my homeowners association (HOA) had its own rules that I had to follow. Over the past three years, my city introduced new regulations for short-term rentals. While I was well aware of these changes and able to adjust accordingly, this serves as a reminder that staying informed about local regulations is crucial. The solution to this mistake is to stay informed and be prepared to adapt. Always stay updated on local regulations and make sure your property complies. Additionally, be prepared to pivot your hosting strategy if regulations change unexpectedly.

When I first started hosting, my primary goal was to offset my mortgage payments, and profitability wasn’t at the forefront of my mind. However, when I acquired a stand-alone short-term rental investment, I overlooked certain operating expenses in my overall profit calculations. Elements like replenishing supplies, furnishing, and maintaining the property needed more consideration. As I transitioned from viewing short-term rentals as my side hustle to treating it as a full-fledged business, I realized the importance of a more comprehensive financial plan. The solution to this mistake is to proactively manage your expenses. Create a comprehensive list of potential operating costs and incorporate them into your budget and pricing strategy to ensure profitability.

While a unique interior design can set your property apart, it can also be a hindrance if not executed thoughtfully. I vividly remember a time when I painted my living room a loud, unconventional color, thinking it would add character. However, this choice turned out to be a deterrent for potential guests, and bookings were scarce. It was only when I toned down the color palette and aimed for more universally appealing decor that I saw a noticeable increase in bookings. The solution to this mistake is to make your interior design captivating. Strike the right balance between unique interior design and broad appeal. Reflect on your decor choices and their potential impact on potential guests. Consider seeking the expertise of a professional designer to help you infuse personality into your space while appealing to a diverse range of guests.

In my early hosting days, I assumed that guests would naturally understand what was expected of them. However, this assumption often led to misunderstandings, and I found myself addressing issues that could have been avoided with a well-defined set of rules. The solution to this mistake is to establish and communicate house rules to your guests. Create a comprehensive set of rules that cover important aspects like check-in/check-out procedures, toiletry provisions, parking instructions, quiet hours, smoking policies, and any specific guidelines related to your property. Once you have these rules in place, make sure to communicate them clearly to your guests, both before booking and upon arrival.

I always made an effort to greet my guests upon arrival and ask them how things went during check-out, assuming this was sufficient. However, there was an instance where I failed to maintain contact during the guest’s stay. While they still left me a kind review, the guest mentioned an issue during their stay that I could have easily addressed had I been more attentive. The solution to this mistake is to check in with your guests during their stay. Make a practice of maintaining open communication with your guests throughout their stay. It doesn’t have to be intrusive, but a simple message to check if everything is going smoothly or offer assistance can go a long way. By staying attentive and connected, you can address any concerns promptly and ensure a positive guest experience.

As I made a deeper commitment to hosting guests, I quickly realized that it goes beyond just providing accommodations. Successful short-term rental hosts understand that they’ve entered the hospitality industry, where guest satisfaction is based on much more than a place to stay. Short-term rentals involve a commitment to maintaining a high-quality guest experience, managing bookings, ensuring cleanliness and property upkeep, and promptly addressing guest inquiries and needs. The solution to this mistake is to embrace the demands of your short-term rental and the hospitality industry. Acknowledge and embrace the demands of the hospitality industry within short-term rentals. Recognize that hosting requires consistent effort and dedication to ensuring guest satisfaction. Consider whether you have the time and resources to manage these tasks efficiently or if it’s worth delegating some responsibilities to professional property managers, cleaning services, and other vendors.

In conclusion, my journey as an STR host has been filled with valuable lessons learned from the mistakes I made during my first year. By avoiding these mistakes, you can set yourself up for success and create exceptional guest experiences from the start. Invest in professional photography, adjust your pricing manually, expand your listing presence, stay informed about regulations, proactively manage your expenses, make your interior design captivating, establish and communicate house rules, check in with your guests during their stay, and embrace the demands of the hospitality industry. With these insights in mind, you can maximize your property’s performance and remove the management hassle, ensuring a successful short-term rental venture.

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