Starting Short Term Rental

[Johnathan Osborne]

I am interested in starting a short term vacation rental business using airbnb and would like some advice. I have purchased 10 acres just outside of Asheville NC and we are turning it into a homestead type place. We live on the land full-time. The land was part of a larger farm and was abandoned for about 15 years prior to us obtaining it. We have lots of work yet to do clearing/landscaping to get it back to beautiful. We currently have two barns (needing some rehab), chickens, and a garden. We would like to generate some income from the place and think short term rentals would be a viable option. My hesitation are start up cost. I do not want to rent space in my house so we are considering building a tiny house/tree house or possibly some type of glamping tents. Since we are not 100% sure we will enjoy this type of business we don't want to invest crazy amounts of money and then figure out this is not the route for us(although we would probably have a pretty cool guest house). I do realize you have to take some risk and the more unique the place is the more successful it will be. Some rentals in this area seem to be successful with minimal amenities i.e. composting toilets, solar panels, no running water bring your own cooler type of place. Has anyone out there started from ground up...please give advice?

Thanks!

[Matt Rothwell]

If I were you, I'd just run the numbers, they'll tell you what's worth doing. I have no short term rentals, but this applies to any business.  You need to know how much you can make, and how much it'll cost to make that money.  

I would:

-Figure out what the average occupancy rate is and then pad it by 10-15%

-Look and see how much similar units are renting for, and pad it by 10-15%

-Get some quotes for house cleaning, since its going to get really old cleaning that place over and over again after guests leave it a mess

-Get some quotes to figure out how much it'll cost to build the houses, build the driveway, lay the septic, run the power, dig the well, etc.  

None of that should cost you any money, just your time. If you do that and it looks like you'll still make money, then run with it.  

Also, if it were me, I'd probably figure in a finance cost.  Basically, I'd figure out what the monthly payments would be on a loan to finance the capex and subtract it from my revenue. That's essentially the "cost of your money", even if you use cash reserves to do the original building.  

One last thing--I would probably build the houses as "real" houses, so you could long-term rent if you get tired of short term rentals.