I’ll cut to the chase – if you want to live rent-free this is what you need to do:
- Get your tax refund.
- Rent another apartment or house ideally near your residence and in a safe quiet area.
- Prepare the unit: perform a thorough cleaning, paint walls to look fresh, replace older or worn appliances.
- Decorate and furnish the entire space for guests to stay. Be sure to include items like towels, linens, toiletries, and other basic essentials. Tip: Think of what hotels provide for their guests.
- Become a host on Airbnb, VRBO, and Booking.com and add your property for listing
- Get paid!
Why is renting a property out as a hotel-like stay for short term or temporary travelers better than having long-term tenants?
For the past seven years, my boyfriend and I have been working on condominiums and houses that were leased by tenants. We would do repairs and cleanouts to prepare units for new tenants to move in. We were constantly repairing appliances that were being misused and abused by tenants causing many repairs and frequent replacements of appliances, furnishings and other cosmetic repairs (holes in walls, stains in carpet, etc).
All of the constant hands-on attention required became a substantial financial burden for landlords. Not only was this expense bringing the net profit from the unit to break even but any eviction would cut revenue gained previously. At the end of the day, becoming a landlord proved to be an investment that involved a lot of hard work for essentially minimal benefit.
The people we worked for decided to make some bold changes to this business model and turned all properties into vacation rental homes and not only had they proved to be more profitable, but the units were much better maintained by the guests and because they did not stay very long or bring a bunch of their junk and pets along with them, we are able to keep the places exceptionally clean and the wear on the house was much less altogether even despite the increased traffic and turnover. In the next section I will go through the general process we went through to make this happen:
How We Switched From Leasing To Long-Term Tenants To Hosting Short-Term Vacation Renters:
- Current tenants at that time were cordially notified that their lease could not be renewed. Tenants knew well ahead of time, months before the term of the agreement had completed to give them ample time to prepare to move.
- Once the property was empty, we did a good deep cleaning of everything and replaced or upgraded whatever we felt was below a moderate standard.
- All appliances that were in excellent condition still were taken apart and cleaned thoroughly inside and out. Otherwise, they were replaced with new or new-looking ones that matched the ones we could salvage.
- All fixtures (lights, switches, outlets, faucets, screens, covers, etc.) were removed and cleaned or replaced so that they all matched consistently throughout the space.
- Cabinets were lightly sanded and refinished to look fresh and we added handles to all of them (including in the restrooms) to prevent or at least decrease the likelihood of anyone touching them directly. In doing so the cabinets could remain clean and/or in good condition for longer. The insides of all of the cabinets were cleaned and relined.
- The entirety of the unit was repainted to make the place look and feel as fresh as possible.
- In each bathroom, new plastic toilet seat covers were installed and the bathtub or shower floors were refinished if it did not look essentially new after scrubbing them. Detachable shower heads with hoses were installed as well as one shower handle for safety.
- Any other aspects of the property that weren’t modern and very new/clean looking were replaced as needed (counters, floors etc.)
- After getting the property ready, we filled the unit with furniture and other amenities including:
beds, dishes, toiletries, ironing board, hairdryer, lamps, books, television, internet, games, books, coffee, basic spices, etc.
- Finally, we took many high-quality pictures (never forget ~ people eat with their eyes) and listed it as a temporary rental or vacation home online through VRBO, Airbnb, and Booking.com. These are all companies that allow anyone to rent out their property like a DIY hotel or dinette.
You can even rent out a single room in your apartment if you do not have an entire property to list if you are comfortable sharing your space with strangers for a handful of days at a time. Many people do that and actually enjoy it very much and you might too!
How Are Nightly Prices Set For Vacation Rentals?
Ultimately you can set the price to whatever you think it should be. However, it would be a good idea to follow the guidance of these platforms because they use complex algorithms and have a lot of data compiled to give fairly accurate booking forecasts by comparing your property to similar ones in your area, what people are searching for, and which of your competitors are winning booking and how your listing differs from your competitors. A good way to visualize this is under the market insights tab where you can see the average price of booked vs. unbooked properties that are most similar to yours (as far as price range and number of occupants or bedrooms available) and the volume of searches per day or date range.
Generally, the recommended price you set per night is typically going to be a bit less than a traditional hotel because there is an uncertainty to it all for guests. Mainly because there isn’t the same standardization or consistency as expected from hotel chains. Also, it is lower to draw in new customers who may feel uncomfortable staying in someone else’s home. Depending on how your initial guests rate your space and the supply/demand for your area they may suggest that you increase or decrease your nightly rate.
Each company has a sort of smart pricing feature that you can turn on. You can select the kind of strategy you’d like to implement as well as set your earnings goal. I truly recommend anyone listing to at least try out this feature because it works very well. You can keep this feature activated and still turn it off for certain days of the week or even just specific individual dates. For instance, I usually turn it off and set higher prices for just the night before or night of a holiday a year in advance. I do this primarily because while those dates may not currently be booked, I know that they will be almost for certain and because they are farther out on the calendar, there is no demand for them so the prices for them are set too low by this marketing tool in my opinion. If someone booked those dates now for next year I’d be losing a good amount of money so I manually increase those dates in anticipation of the future demand for them.
How Much Can I Expect To Profit And How Do I Live Rent-Free?
You choose the nightly price so it is really up to you how much you will profit. The cleaner you keep the place and the better you furnish it with amenities people really like such as televisions in the living room and each of the bedrooms the more you can request per night. A steady profit margin if you have one apartment that you rent out should be at least receive twice as much as you pay in rent for that apartment and maybe 10-20% more to pay for internet or cable (if you’re debating between the two: go with internet and get a good antennae and some sort of casting dongle so people can get local stations and stream online content to it from their own devices or media subscriptions they have). Therefore because you profit as much as you dish out in rent by maintaining that one apartment as a vacation rental, you will generate enough to pay for the one that you live in as well! If you can get these two close enough together then you may be able to share your internet with that unit and not have to double up on that bill.
That’s all for now but come back again for more vacation rental tips and upcoming posts that will elaborate on this topic in more detail. Until then explore Airbnb, VRBO, and Booking.com to get a better feel for what they are or better yet book one for a night and experience them yourself!