Vacation homes are nice to have, but you may feel that your unit is going to waste because you are not using it often enough. In that case, you may want to consider turning your home into a short-term rental.
Short-term rentals give property owners a way to profit off their vacation homes that do not involve outright selling. By turning your property into a short-term rental, you can make some money on the side while still retaining that valuable asset.
So, is investing in a short-term rental a good idea? Is remodeling your vacation rental a profitable move? Find out the answers to those questions by reading on.
What Are the Rules for Short-Term Rentals in Your Area?
Before we get into the potential benefits of remodeling your short-term rental, let’s first discuss the rules that govern them. You cannot turn your vacation home into a short-term rental on a whim. There are rules you need to follow if you want to rent out your vacation home.
For starters, you must decide what kind of short-term rental you want to operate. In San Diego County, there are four tiers of short-term rentals.
Tier 1 is short-term rentals with occupants for an aggregate of twenty days or less. They are known as part-time rentals.
Tier 2 refers to home-sharing rentals. You can rent out home-sharing rentals for more than twenty days, but you must also live there.
The Tier 3 whole-home rentals allow the property owners to rent the property for more than twenty days even if they are not permanent residents. These are for properties excluding Mission Beach.
Lastly, you have the Tier 4 rentals for properties in Mission Beach. They are the same as whole-home rentals but focus, specifically on that area.
Note that application and license fees differ based on the tier your rental property belongs to.
The application and license fees for Tier 1 rentals are $25 and $100, respectively. For Tier 2, the application fee costs $25 while the license fee is $225. Tier 3 and Tier 4 rentals both have $70 application fees and $1,000 application fees.
Once you determine that your vacation home can be a short-term rental, you can start implementing your upgrades.
What Are the Benefits of Remodeling Your Short-Term Rental?
The prospect of making passive income from a property you hardly use is enticing. You can probably make good money if your vacation home is in decent shape.
Still, remodeling your vacation home before opening it to guests makes a lot of sense. The reasons detailed below help explain why.
Your Short-Term Rental Becomes More Appealing to Guests
Competition is fierce in the accommodation industry. If you want to operate a vacation rental, remember that you need to go up against hotels, motels, and other short-term rentals.
It is easy to get lost in the shuffle when dealing with that many competitors. You need to do something to make your rental property stand out, so update your rental to be more competitive with other establishments.
Talk to a local contractor about the upgrades you should pay for if you want your short-term rental to be more enticing to guests. Speaking to a local contractor is a must because they have a better grasp of architectural trends in the area. Lean on their knowledge as you seek to implement the most appealing upgrades.
Your Short-Term Rental Can Accommodate More People
Most vacation homes tend to be on the smaller side. Vacation homes usually have simple kitchens and living rooms that are not spacious. Even the number of available bedrooms likely tops out at two.
That may be fine for a small family, but tourists do not always travel in small groups. It is common to find traveling parties made up of six or eight people. You probably cannot land those guests if you have a small vacation rental.
Remodeling your rental changes that. You can open up the unit’s floor plan to create more living space. After remodeling, the unit that could previously only house four people can now comfortably accommodate six to eight tourists.
You May Charge Higher Rent
Upgrading your short-term rental will help it become more appealing to guests. Not long after remodeling, you may find plenty of guests lining up to book a weekend stay.
Your decision to remodel is already paying off, not only because you are getting more guests. Also, thanks to the high demand for your property, you can even increase the rent.
Guests may be open to paying more for a weekend in your vacation home because they know it will be worth it. They receive a comfortable place to stay, and they will not need to deal with strangers. That is a winning combination for many people on vacation.
You Can Turn Your Short-Term Rental into a Whole-Home Rental
Operating a short-term rental for twenty days out of the year will take work, but it is not that bothersome. Drop by the property between rentals to clean up, and it should be good to go. You do not need to worry too much about the unit sustaining damage because people are not staying long enough to do that.
But what if you want to turn your short-term rental into a steady source of income? In that case, you may need to turn it into a Tier 3 rental. Before you can do that, you must make sure that your rental property can hold up.
That is where the upgrades come in. You can remodel your rental property to endure extended stays from your guests. Even if your guests get a bit unruly and messy, your vacation home should hold up.
Since you are looking to turn your short-term rental into a larger part of your revenue stream, you must also be willing to invest in it. Without the upgrades, your short-term rental could end up falling into a state of disrepair.
You Can Make Your Rental Safer
Safety is always an important thing to consider for rental property owners. If you rent out one of your properties, you must be certain that your guests will be safe there.
As Policy Genius notes, vacation rental insurance can cover your legal fees if an injured tenant sues you but preventing that kind of situation would be better. After all, they are your guests, and you should do your best to keep them safe.
Remodeling the rental property can help you protect your guests better. Focus on repairing any leaks or electrical hazards during remodeling. You should also check for broken stairs or old floorboards that could cause accidents.
Address those potential issues during remodeling to protect your guests. Doing so can also save you from some legal headaches.
You Can Gain More Returning Guests
Vacation rentals are not the only alternatives that tourists consider when they have no other options. In many situations, tourists seek short-term rentals because they would rather do business with someone, they can get to know instead of a hotel chain.
Many guests are interested in finding vacation rentals they can keep returning to. You should do your best to take advantage of that.
By remodeling your vacation rental, you effectively give your guests another reason to book a future stay. If they find your short-term rental comfortable and accommodating, they will not be enticed by hotels anymore.
Improve your short-term rental and gain more loyal customers in the process.
You Can Reduce Your Operating Costs
The guests staying in your rental are likely paying a fixed price for the privilege. They do not need to worry about the water or electric bills, so it is hard to blame them for their generous usage of those resources.
Unfortunately, your guests consuming electricity and water could decrease your profits. Whatever you are making on rent could be lost when the bills come due. Breaking even on your rental would be disappointing so install upgrades that will prevent that.
Consider installing low-flow faucets and other fixtures in the bathroom of your rental property to keep your water bills under control. Installing some LED lights and other energy-efficient fixtures should also help with lowering your electric bills.
In exchange for those upgrades, you can receive benefits for many years to come. That is a trade-off you should be willing to make each time.
Remodeling a Short-Term Rental Does Not Need to Be Expensive
Thus far, we have touted the many benefits of remodeling your short-term rental, but we have not discussed the potential downsides. If there is a downside that stands out, it has to be the cost, right?
Vacation rentals are typically smaller than conventional homes but remodeling them will still cost a pretty penny. Well, that could be the case, but it does not need to be.
Remodeling does not need to completely drain your bank account if you work with the right people.
Coordinate with your contractor to focus on the elements of your vacation rental that need the most work. Talk about the materials and ask if you can get discounts by securing them from local providers. Your contractor could make that happen if they have long-established relationships with suppliers in your area.
You can also talk about the budget you have allotted for this project. Mention it to the contractor and say that you cannot spend more than that. They should present you with a plan that works with the budget you have available.
Do not shy away from remodeling your vacation rental because you are worried about cost. That is an issue you can minimize if you work with the right people.
You Can Still Enjoy Your Vacation Rental
Why should you bother remodeling your short-term rental? One reason is that you can still use it.
Even if you have decided to turn your short-term rental into a full-time source of income, which should not stop you from using it. During the off-seasons, you can pack your bags and head out to your vacation home with your family.
Spend the weekend there and enjoy the upgrades that you paid for. It is always nice to go on a vacation to truly get away from it all and your short-term rental will still give you that opportunity.
When you are deciding whether to remodel your vacation rental, remember that you are doing it as much for yourself as for your potential guests.
You Can Sell Your Short-Term Rental in the Future
Lastly, consider remodeling your short-term rental to recoup significant gains in the future. By that, we mean that you can turn a tidy profit if you sell your vacation home.
Vacation homes can be good investments. If you purchased one in an area that suddenly blossomed into a major spot for commerce or tourism, then you will likely be greeted with plenty of offers if you ever decide to sell.
You may double your investment thanks to that area becoming more popular. On top of that, certain renovations can significantly increase the value of your home, leading to even more profits. Examples of renovations that yield high returns include bathroom and kitchen upgrades.
Put your remodeled home on the market, then sit back and watch the large offers come in.
Are you looking for a contractor who can work on your short-term rental? Here at Eco Minded Solutions, we specialize in adding upgrades that yield the best returns. Reach out to us today if you are interested in turning your vacation home into a sought-after rental property!
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