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Updated 11 months ago, 01/23/2024
New to short term rentals - what are the biggest operational challenges?
Hi all,
I have had some experience in small real estate investing but a friend of mine has approached me to start investing in short-term rentals. I am aware of the main differences and landscape but was just curious of the biggest operational challenges that owners/operators face in this space? In addition, are their adequate services/technology to assist with those challenges?
I really appreciate any guidance here so that I can determine if this is a correct decision for me personally.
Thanks in advance.
Far as technology that assists in running STR....
- Hospitable for PMS
- Turno for cleaner automation - though i still message my cleaners everytime to verify they did clean and for them to submit photos of the property once their cleaning is completed.
- Stayfi for email capture to build out email list
- Schlage Encode for door knob - easy check in code creation. keep lock box somewhere on property with a physical key in it in case battery every dies or lock doesnt work
- Pricelabs - pricing automation. however I do organic pricing. I personally adjust all my pricing as I feel this helps me have more control and ultimately more bookings.
- Airdna, mashvisor, str insights, rabbu - market data research tools for STR investing
Far as challenges in STR...
- cleaning team: finding reliable cleaners who follow the way YOU want it cleaned. You may have to hire and fire several cleaners before you find a good one. try finding a cleaner who are willing to do simple errands as well that will keep you out of the weeds.
- handyman: you need at least two handymen that may be willing to go out and fix various simple things should the need arise.
- if your listing your property on different booking platforms be sure you use a property management software that allows you to integrate those calendars into one space so that you don't have double bookings.
- keep extra linens on hand because linens will get stained, its part of the job and it will happen. either your cleaning team can keep these OR you could leave a set to change beds in case a guest stains a set and wants to replace it for their stay. either way you need at least two sets of full bed linens per bed
@Mindy Nicol thank you. From the sounds of things, it is becoming more and more apparent about the time commitment. The tax piece is also something that I think a lot of beginners do not think about but appreciate you raising it. Sounds like you have a lot going on and congrats on the success. I’ve heard a lot of amazing things about your area and very interested about the market. I think there is a lot of opportunity so I’ll deff be in contact.
@Zachary Cain Humphrey wow that is a lot of systems. How do you keep on top of all of that? Do they at least feed each other the necessary information?
So helpful regarding the cleaning feedback. Such a critical part of this operation. Looking into Turno as we speak.
Thanks for the support!
Sounds great @Jonathan Foux I love talking about STRs!
Quote from @Zachary Cain Humphrey:
Quote from @Jonathan Foux:
Hi all,
I have had some experience in small real estate investing but a friend of mine has approached me to start investing in short-term rentals. I am aware of the main differences and landscape but was just curious of the biggest operational challenges that owners/operators face in this space? In addition, are their adequate services/technology to assist with those challenges?
I really appreciate any guidance here so that I can determine if this is a correct decision for me personally.
Thanks in advance.
Far as technology that assists in running STR....
- Hospitable for PMS
- Turno for cleaner automation - though i still message my cleaners everytime to verify they did clean and for them to submit photos of the property once their cleaning is completed.
- Stayfi for email capture to build out email list
- Schlage Encode for door knob - easy check in code creation. keep lock box somewhere on property with a physical key in it in case battery every dies or lock doesnt work
- Pricelabs - pricing automation. however I do organic pricing. I personally adjust all my pricing as I feel this helps me have more control and ultimately more bookings.
- Airdna, mashvisor, str insights, rabbu - market data research tools for STR investing
Far as challenges...
- cleaning team: finding reliable cleaners who follow the way YOU want it cleaned. You may have to hire and fire several cleaners before you find a good one. try finding a cleaner who are willing to do simple errands as well that will keep you out of the weeds.
- handyman: you need at least two handymen that may be willing to go out and fix various simple things should the need arise.
- if your listing your property on different booking platforms be sure you use a property management software that allows you to integrate those calendars into one space so that you don't have double bookings.
- keep extra linens on hand because linens will get stained, its part of the job and it will happen. either your cleaning team can keep these OR you could leave a set to change beds in case a guest stains a set and wants to replace it for their stay. either way you need at least two sets of full bed linens per bed
Thanks for the detailed information.
@Jonathan Foux rental real estate functions on a pendulum (less effort, less return; more effort, more return). STRs are an active business which requires more time & effort but greater returns are possible especially with self management. You can do remote self management, many of us do. You just have to build a local team. A great cleaner and a couple handymen on speed dial are key. It’s probably a good solid 3 month learning curve once you immerse yourself but you too can become a Jedi. Good luck!
Quote from @Jonathan Foux:
@Zachary Cain Humphrey wow that is a lot of systems. How do you keep on top of all of that? Do they at least feed each other the necessary information?
So helpful regarding the cleaning feedback. Such a critical part of this operation. Looking into Turno as we speak.
Thanks for the support!
Check pricelabs out daily to see that pricing is going okay, maybe every other day. Once you open an account you will find out what I mean by Learning /training the software to learn your pricing as its AI driven. Turno is automatic. Once you add your cleaner to your calendar they can see all bookings and turno will notify the cleaner automatically of when a cleaning is needed. Stayfi is also automatic once you have it set up with your wifi, no effort needed there. Schlage Encode is an installed wife driven lock for your front door so that guests can easily get a new code each time. Again seconds to generate a code to then send to the guest. Hospitable (or any other) property management software links to your air bnb account, you then fill out messages you want automatically sent to each guest. You then only need to reply personally when guests ask questions outside of what your automatic messages can answer. by automating your messaging you save 90% of the time you would spend running an STR. Airdna, mashvisor, str insights are all used to research various markets so I use them when needed. Overall once the initial learning curve is over, maybe the first 1-2 months, you will have a very strong and clear understanding and what seems foggy now will be clear. Happy to help!
There's many, but a new one to add to the list is financing. Since Covid, 95% of DSCR lenders won't touch STR's, and the 5% that will, reduce LTV by 5% on both sides, refinances and acquisitions, as well as a rate increase.
@Timothy Hero thanks. I just reached out to you about something else on your website. Thank you.
Quote from @Jonathan Foux:
Hi all,
I have had some experience in small real estate investing but a friend of mine has approached me to start investing in short-term rentals. I am aware of the main differences and landscape but was just curious of the biggest operational challenges that owners/operators face in this space? In addition, are their adequate services/technology to assist with those challenges?
I really appreciate any guidance here so that I can determine if this is a correct decision for me personally.
Thanks in advance.
Biggest operational challenge is likely based on how experienced you currently are. If not experienced at all, everything will feel challenging. Your first complaint will physically hurt. But, you get over this and adapt over time. Just now I got a text from my cleaner that guest punched a hole in one of the bedroom doors. Years ago, this would bring some angst and panic. Now, it's a text to one of the maintenance guys and a claim filed on airbnb. Keep it moving.
In terms of operations, a lot of guys mention a "tech stack". Basically, Property Management Software (there's a ton), Dynamic Pricing Tools (Also, many, but I like Pricelabs. I've had it for years). Airbnb's backend platform and a dynamic pricing tool is really all you need with just one property.
To ease headaches, a cleaner you can count on is a must. This is challenging with just one listing because your not enough business to that company to get highly tailored focus. But, you'll overcome this by building a personal relationship with them so they know you care. Same goes for maintenance guys. Craigslist early will be your best bet. You'll expand your contacts for various trades and specialties over time.
In the end, unless you're hiring an outside management company, it's something that will take up time and energy from your day to day. It's a business, not passive.
Quote from @Jonathan Foux:
@Neal Z. thanks for the advice. I agree, not scared of a bit of hard work (that is part of the fun). I am worried about finding the right maintenance team but will just have to search around. Best of luck with everything.
If just one spot, you really won't be calling on maintenance guys much. When something happens, you'll scramble to find someone to solve the problem at reasonable cost. Whoever does, becomes your go to guy until they can't solve something, then cycle repeats. It's a challenge in new markets to establish these things, but cleaners often have someone they know, pool guy knows someone, photographer knows someone, agent knows someone, etc. Sort of just run thru your list of contacts and ask around if/when something comes up you don't already have a contact for.
I can't tell you how many random contacts I have in my phone that just say "Handyman (City)", "HVAC (City)", "Pest Control (City)", etc. Many are guys I used once. Some contacts came off vans driving on the highway in my area. Others were parked in Home Depot lot when I ran in to get something. That's easy way to build up plumbing contacts and other trades.
I often use a neighbor on the block to handle trash/recycling for me. They keep an eye on things.