Seeking Advice on STR Profitability & Strategic Adjustments for Year 2

[Mary Peale]

Hi everyone,

I’m looking for some guidance on improving the performance of our short-term rental, and I’d really appreciate your insights. Here’s a quick breakdown of our financials:

• Operational expenses (excluding mortgage): $33k (Jan-Dec 2024)
• Annual mortgage payments: $58k
• Total needed to break even: $91k+
• Income earned this year: $80k

Clearly, we need to bridge a gap of about $11k just to cover our expenses, and I’m exploring options to increase profitability. Specifically, I’m curious about the following:

1. 2/2 vs. 3/2 properties: Are there significant advantages to offering a 2/2? For instance, do 2/2 properties typically have longer average stays, or are they more desirable?
2. Cleaning fee impact: On average, we spent $2,500/month on cleaning fees this year. Would encouraging longer stays realistically help reduce this, especially for a medium-sized cabin?
3. Nightly rates: Are 2/2 properties generally priced lower per night than 3-bedroom properties? If so, does this make it harder to meet revenue benchmarks?
4. Year 2 turnaround: What strategies could we implement to project a higher ROI in our second year?
5. Exit strategy considerations: Is it worth absorbing some of the costs and focusing on long-term appreciation?

I’d love to hear from others who have navigated similar challenges or have insights on improving profitability in the short-term rental space. Thanks in advance!

[Mary Peale]

May I ask which amenities you added that you believe contributed to a revenue boost?