Starting a short-term rental business in 2022 may sound lucrative, but it isn't the easiest. You need to analyze a set of factors and aspects before finally getting the business up and running. 

A short-term rental business is about offering your property for rent on a nightly, weekly or monthly basis. Since short-term rentals are hired for a shorter time interval, you need to manage tons of things, such as booking fees, maintenance costs, tax benefits and more. Your guests may constitute different categories such as leisure, business travellers, etc.

Short-term rentals are way more profitable compared to long-term rental businesses. According to AirDNA analytics, the average revenue from short-term rentals grew to a whopping $56,000 since last year. 

Today, let's dive deeper into the 7 crucial steps that will help you figure out everything about starting a short-term rental business and generating long-term profits.

1.Create a unique business plan

A well-written business plan is necessary to lay the first few blocks of your short-term rental business. You always need to build a specific, realistic, and measurable short-term rental business plan to keep you focused on the goal.

Ensure to include the costs involved in building your short-term rental business. Starting from the down payment to the utilities, cleaning and repairs and others. You need to keep everything into account when creating your business plan.

2.Analyze the legalities

There are different laws for short-term rentals that vary across other countries. You need to analyze the laws before you start your business. You may have to collect a lodging tax from your guests and also file monthly tax returns alongside obtaining a rental business license. It is always advised to refer to a real estate attorney or property management company to better understand local short-term rental laws.

3.Hunt for the best location

The most significant determining factor of your business's revenue potential is the location it is built in. You can rely on data from different websites such as Lodgify, Realtor.com and others to understand the ideal location for your property investment. These websites can give you a fantastic overview of the best markets that offer various amenities, year-round attractions and more!

4.Build a management strategy

You can either manage the property yourself or hire a property management expert specializing in managing short-term rental businesses. Here are some aspects you may want to consider before you get to a decision on your property management strategy:

• The number of inquiries, booking confirmations, guest arrivals, calendar updates, etc. handled per day

• Taking care of the cleaning and utility management of the rental property. 

• Restocking the essentials of the property after every guest

• Managing the USPs of the property to generate more 5-star reviews.

5.Choosing the right pricing strategy

Since short-term rental properties are rented at a nightly rate, it may fluctuate depending on the seasonality, competition and the length of stay. This is why you need to focus on analyzing the rates of the other short-term local rentals to bring the most lucrative deals to your guests. For example, you need to focus on the weekend getaway deals or weekend price reduction offers to keep the cash flow consistent with your short-term rental business.

6.List on Booking sites

To generate a constant revenue flow, you need to remain competitive by listing your property on different booking sites such as Airbnb, TripAdvisor, Pinterest, Instagram, Expedia, Vrbo, Booking.com and others. 

Figure out the ranking system in these websites, as most are based on guest reviews and the listing overview. Offering a flexible cancellation policy and highlighting the unique USPs of the property are just a few things that contribute to a superior guest experience.

7.Invest in a good software system

There are plenty of short-term rental software systems that help property owners schedule reservations, coordinate calendars across multiple platforms, manage the maintenance and cleaning and keep their finances in check. 

Even though these systems always collect a minimal fee, it is worth it as it helps you seamlessly manage your business and generate way more long-term benefits.

Final Thoughts

These are just the building blocks to a successful short-term rental business venture. The goal is to look for ideal locations to invest and keep the management in check using different software and property experts. Considering these steps, you can soon build one of the most profitable short-term rental businesses in your locality!