If you’ve seen a lot of success as a vacation rental host, the next logical step is to think about how to expand your Airbnb business. Buying a new vacation rental property in a lucrative city is a tempting prospect, but there are a few things to consider before taking the plunge.
Here are 4 major things to keep in mind before expanding your Airbnb business to other cities.
1. Do your research before expanding your Airbnb business.
If you’re planning on expanding your Airbnb business, you can’t just look for the most affordable property on the market. You need to first do your research and make sure the city you choose to buy in is popular with potential guests.
Some cities are more lucrative than others; you might pay more up-front for a rental property in a high cost-of-living area, but you’ll be able to rake in more money down the line if it’s a vacation hotspot. There are many destinations, such as Las Vegas and Orlando, that have remained consistently popular with vacationers for many years.
However, don’t only look at popular vacation destinations. Since the onset of the pandemic, travel habits have shifted in a big way. Many people are looking to escape to more remote locations, such as cabins in wooded areas or properties close to national parks and other outdoor attractions.
When researching potential property locations, keep in mind that many areas will have peak- and off-seasons. Be sure that you’re financially stable enough to weather the slower periods and know when to expect them.
Some locations offer year-round activities that may help you attract guests no matter the season, but others see most of their visitors in a shorter time frame.
You should also look into local rules and regulations governing Airbnb and other property rental services. Many cities are making it harder for hosts to homeshare, and you’ll want to be sure you don’t run afoul of any laws when looking to grow your business.
2. Consider hiring a vacation rental property manager.
The problem with expanding to a new city is that if you don’t live there, you’re not likely to know much about the area or what activities there are for tourists to do. It will also be more difficult for you to tend to maintenance duties on the property or troubleshoot if a guest is having an issue.
Because of this, you might want to factor in the cost of hiring a property management company into your new investment. A rental management company can help you handle customer service, provide on-site assistance, and deliver deep local knowledge to your guests to help them have the best possible experience on their trip.
Although property management companies take a percentage of your profits, they can save you a lot of time and hassle. Ultimately, you might end up making more money with a company to help you optimize your services.
3. Prepare for the worst.
The global pandemic of 2020 showed us that no industry is completely untouchable when it comes to unforeseen disasters. That’s been especially true for the vacation rental industry. Before expanding, have a plan for what you would do if another illness, bad weather, or local regulations create a sudden drop in tourism in your new city.
With the pandemic in particular, hosts have suddenly found themselves investing more in cleaning services and ways to make their vacation rentals more sanitary. It’s a good idea to have an emergency fund on hand for every property you own, both to insulate you against unexpected lean times and to help you adjust to any massive changes you might face.
4. Put in the work.
Many properties for sale will not immediately be ready to host guests. Some have outdated appliances or decor, some have a strange number of bedrooms or bathrooms, and some have been neglected to the point of disrepair. It’s likely you will need to put some money into the property before you can start seeing significant returns on your investment.
Be prepared to pay for remodeling and/or landscaping services to make your property more attractive to potential guests. A few upgrades can go a long way towards making a vacation rental more appealing to potential guests.
While expanding your Airbnb business can lead to another lucrative stream of income for many hosts, it’s not a decision anyone should take lightly. It’s important to understand what you’re getting into before you buy. With a little strategy, however, you can grow your business and maximize your profits in a whole new place.