In recent years, vacation rentals have seen a significant surge in popularity, a trend that continues to grow. The market has exploded, especially after the pandemic, as vacationers increasingly seek private, home-away-from-home accommodations. This trend presents a lucrative opportunity for homeowners, as renting out a vacation home can generate a substantial income. If you’ve been considering renting your house for vacation, you’re on the right track. Whether you’re temporarily away or simply because you’re traveling yourself, you can earn significant revenues by renting out your own space.
All You Need to Know About How to Turn Your Encinitas Home Into a Profitable Short-Term Rental Property
In this comprehensive article, we will guide you through the process of turning your home into a successful vacation rental. We will cover all the crucial aspects of running a profitable rental business, from market analysis and landlord insurance to property preparation, stocking essential supplies, offering special amenities, advertising, and implementing keyless check-in. By the end, you’ll be equipped with the knowledge and tools to transform your house into a revenue-generating property.
We will also include crucial considerations to protect yourself as landlord prior to renting out your space. By following our guide you will be able to save money, time and effort along the way. You will also find out how professional property management agencies can help you boost your revenue and enjoy stress-free ownership in places like Encinitas, California and other locations.
Table of Contents
Starting a vacation rental business: Pros & Cons
Step 1: Check laws and ordinances
Step 2: Conduct rental market analysis
Step 3: Obtain the right insurance policy
Step 5: Initial property inspection
Step 6: Prepare your residence for the guests (staging)
Step 9: Enable seamless check in with keyless entry, remote locks or lockbox
Step 10: Set house rules and draft a strong rent contract
Step 11: Create powerful listing & advertise
Boost Your Rental Income In Encinitas With Our First-Class Property Management Services
Swell Property is a real estate agency known for its premier rental property management services in Encinitas. Our experienced managers, realtors, and real estate agents all work together utilizing valuable knowledge and technical skills to run your rental unit efficiently. Our priority is to increase your revenue and reduce vacancies. We are a full-service agency and a one-stop shop for all rental business services, including advertising, price forming, tenant placement, rent collection, maintenance, customer relations, and so much more. Since 2004, hundreds of homeowners and landlords hired us to manage their properties – both short-term and long-term rentals, while they are on vacation or temporarily relocated or simply when they want professional assistance with their rental venture. We have been managing rental units of various types, including single-family homes, apartments, townhouses, beach villas, casitas, urban residences, etc. Our company is dedicated to providing exceptional service to ensure maximum guest satisfaction. You can reach us by phone at (760) 452-2345 or press the button below to find out how to achieve a laid-back rental ownership experience.
What Is a Vacation Rental?
A vacation rental, also known as short-term rental (STR), is defined as rental of a privately owned dwelling or portion of any structure used for occupancy, lodging, or sleeping purposes. This generally includes short stays of up to 30 consecutive days. If the owner uses the property 51% of the time or more, it’s considered an owner-occupied dwelling. Otherwise, the property is considered a non-owner-occupied dwelling.
Starting a Vacation Rental Business: Pros & Cons
Owning a rental vacation property is a business. And in order to be successful, there are a lot of things you have to do before turning your home into a rental.
As a future landlord, you first have to have realistic expectations. While there are a lot of fantastic benefits to owning a vacation rental, there are also disadvantages that you will probably come across. Take a look at the summary of pros and cons:
Pros:
- Maximized revenues
- Continuous market growth
- Equity appreciation
- Lots of flexibility
- Tax deductions
- Personal use property
Cons:
- Unexpected expenses
- High insurance rates
- Investment risk
- Increased operating expenses
- Harsh competition
- Strict laws and regulations
Step 1: Check Laws And Ordinances
Before investing money and time in converting your current home into a vacation rental unit, make sure you thoroughly review local, state, and federal laws regarding short-term rentals. For those who don’t comply with the law, the fines can be hefty. In fact, some places don’t even allow vacation rentals. Don’t forget to check with homeowner’s association as well, as they sometimes prohibit vacation rentals, too.
Here’s an example of short-term rental laws in the city of Encinitas, California:
- All vacation rentals must hold an STR permit (non-transferable) that is valid for a year ($425 fee for both new permits and renewals)
- Transient Occupancy Taxes (TOT) must be paid quarterly ($39 for new and $24 for renewal of Business registration)
- Required documentation includes application form, Residential building record (RBR), Proof of ownership, site plans and floor plans, copy of liability insurance policy, copy of rental contract, advertisement information, and Title 24 ADA compliance form
- Short-term rental is subject to a City inspection
- Only one vacation rental is allowed within one dwelling
Step 2: Conduct Rental Market Analysis
Just as you must research the laws, you should also analyze rental market trends. Determine the supply and demand for that specific area. Think of the location itself – is it near the beach? Are there a lot of attractions in the vicinity? Is there a school that might attract more guests? Once you have gathered the information needed, start looking into the competition, but not only in the city.
Specifically, examine your direct competitors in your community. Understanding what your competition is doing right and what gives them advantage over others will help you decide what you have to offer, how to price your unit, and how to stay ahead of the competition.
Step 3: Obtain The Right Insurance Policy
Owning a vacation rental is a risky venture. There is always a chance of guests damaging your property, and then there’s added liability, too. Since the majority of homeowners’ insurance policies do not include short-term rentals, you should obtain landlord’s insurance, also referred to as ‘rental property insurance’ or business insurance.
As a future vacation rental landlord, you will be required to acquire liability coverage of $1,000,000.00, either through an individual homeowner’s insurance policy or an umbrella insurance. If you are unsure which insurance coverage to acquire, contact professional property managers or your insurance agent for guidance and advice. Don’t forget to talk to your neighbors to determine the most common risks in the neighborhood.
Step 4: Property Management
Next, decide how you want to manage the property. Do you want a hands-on experience and run it by yourself, or would you rather hire a full-service property management company?
Although there are a lot of aspects of rental business that you can handle online (such as marketing, rent collection, and online booking platform), there are still many things that have to be done offline, such as cleaning, restocking the supplies, tenant issues, meeting with contractors and vendors, etc. For this reason, it is advisable to self-manage only if you are keen on hospitality and can commit a lot of your time and effort.
A highly-qualified property management company, on the other hand, handles all daily tasks related to rental business, including advertising, price forming, renter screening and background check, contract preparation, guest relations, 24/7 emergency assistance, maintenance, repair, property upkeep, communication with contractors, restocking, and many more services.
These are just some of the responsibilities that can be taken care of instead of you. This way, not only the burden is lifted off of your shoulders, but you also get to enjoy extra free time and a chance to focus on something else in life.
Benefits of hiring a property manager to run your vacation rental
While it does come at extra cost, there are numerous benefits of hiring a professional property management company, such as:
- maximized profit
- increased property value
- reduced vacancies
- reduced liability risks
- securing quality guests
- gaining extra time
- preserved healthy unit condition
Step 5: Initial Property Inspection
Before you even start preparing your home for the first guests, you should conduct a full property inspection. A thorough walkthrough of the entire estate will help you determine whether your dwelling is in its top condition or not. You will be able to detect issues and repair them on time before they become a major and costly problem. This way you will avoid maintenance problems during guest stays and negative guest reviews.
Remember to make a maintenance check list schedule for the whole year in order to keep your residence in its best condition. Items to check include appliances (stove, washer, dryer), ventilation, and A/C, plumbing, roof, walls, decks, etc.
Step 6: Prepare Your Residence For The Guests (Staging)
There is a lot to be done when you are prepping your home for paying guests, so let’s look at the most essential adjustments below.
Declutter & depersonalize the space
Remove any personal and valuable items like family photos, framed diplomas, computers, or clothes and store them in a locked area (private closet, outdoor shed) that will be off-limits to the guests. Guests want to see fresh and clean space, without clutter and without owner’s personal mementos. When it comes to what renters are looking for in rentals, this is one of the highly sought-after features.
Deep cleaning
It goes without saying that cleanliness is one of the most crucial aspects of guest satisfaction. Thoroughly clean every nook and corner to ensure a spotless residence for your guests to enjoy. Hire either a professional cleaning company or a property management company to thoroughly clean the space.
Renovation & upgrades
Consider whether investing in rental upgrades will help you attract more guests and whether it will increase your home’s value. Modern travelers value properties with increased comfort. They also appreciate newly renovated bathrooms, renter-friendly kitchens, energy-efficiency, smart home technology, security solutions, high speed internet, and outside seating area.
Storage solutions
According to renters, one of the most desirable features of short-term rental units is having plenty of storage space. When turning your home into a rental property, make sure to create storage space based on the number of visitors you plan to accommodate. Increase home storage by adding multi-functional furniture, shelving, wall and door hooks, and external storage space (sheds, attic, basement).
Emergency kits
Don’t forget to provide a fully-stocked first aid kit and fire extinguishers current on inspections to ensure maximum safety for the occupants.
Step 7: Stock Up On Supplies
Owning a vacation rental can be challenging, especially if the competition is harsh. One of the easiest ways to ensure your home becomes the most appealing in the neighborhood is simply by ensuring it is always fully stocked with basic (and luxurious) supplies.
- Kitchen supplies: spices, condiments, dishes, drinkware, silverware, pots, pans, cooking utensils, serving bowls, baking pans, measuring cups, Ziplock bags, foil, cling wrap, pot holders, dish soap, can openers, coffee filters, garbage bags, cleaning supplies
- Bedroom supplies: quality mattresses, waterproof mattress pads, 2-3 sets of bedding per bed, 2 pillows per bed, comforters, extra blankets, travel crib
- Bathroom supplies: bath towels, hand towels, face towels, washcloths, bath mats, soap, shampoo/conditioner, shower gel, tissues, Q-tips, toilet paper, cotton balls, robes, slippers
- Small appliances: toaster, juicer, coffee maker, blender, microwave, rice cooker, iron, hair dryer, vacuum cleaner
- Living room: workstation, TV, entertainment center, seating, floor cushions, throw blankets, coffee tables, board games
- Outdoor space: outdoor seating, table, grill, sports equipment, toys, sunshades, pool, hot tub, fire pit
Step 8: Add Special Amenities
In order to stand out among the competition, attract more vacationers, and provide a unique experience for your guests, make sure to offer special features. Special amenities will boost your ratings and propel your rental business to new heights. The most desirable features are those that add luxury, convenience and comfort:
- Welcome books (appliance instructions, local recommendations on restaurants and places of interest, garbage removal procedure, emergency numbers)
- Welcome baskets (locally sourced goods, sweets, personalized beverages)
- High-quality toiletries
- Kid-friendly and baby-friendly amenities
- Entertainment center
- Beach toys and water sports equipment
- Beach towels and sunshades
Step 9: Enable Seamless Check In With Keyless Entry, Remote Locks Or Lockbox
Install a lockbox or keyless entry system to enable easy and smooth property access. Keyless entry means that the guests are able to access the premises by entering a code, while a lockbox holds the keys inside. Seamless check-in is exceptionally important for the guests and can even set the tone for the whole trip.
Step 10: Set House Rules And Draft A Strong Rent Contract
Before listing your residence, you need to set house rules. They can include pet policy, cleaning fees, noise rules, minimum stay, payment policy, restitutions, party policy, etc. Established house rules ensure that each party understands what is allowed and what is not allowed on the property. You can find templates of rental agreements online and adjust them according to your preferences.
Next, draw up a rental agreement. It’s always a good idea to consult with an attorney when coming up with house rules and rental agreements to make sure you are legally protected.
Step 11: Create Powerful Listing & Advertise
The next stage involves advertising your rental property.
- Professional photography – Professional real estate images, videos, and virtual tours drive more visitors to your listing, increasing the pool of interested guests, so make sure to make good use of them.
- Listing description – The most captivating vacation rental listings describe the positives with full transparency. This way you gain trust and establish a good reputation as a host. High-quality listings have powerful headlines and showcase positive traits upfront.
- Setting the price – When deciding what to charge clients, it is important to use dynamic pricing strategy and adjust the rates based on market trends, seasonality, supply and demand, and similar factors. If you are not certain whether your pricing strategy is effective or not, hire local property managers to keep your pricing competitive while maintaining the value high.
- Wide exposure – Ad placement on multiple online platforms with high traffic will ensure wide reach and broader audience.
Step 12: Decide How You Will Communicate With The Guests
After you list your home in Encinitas for rent, you need to decide on how you will communicate with your guests. Typically, travelers prefer messaging applications and emails. Provide your renters with clear instructions on check-in procedures, emergency procedures, and other important information, such as Wi-Fi passwords, access to entertainment services, instructions for appliances, or local recommendation. You can create an information booklets in digital form on Canva or provide an actual printed book for them to review. Try to remain available at all times, as prompt communication ranks high among renters.
Final Thoughts
Converting your home into a vacation rental takes a lot of research, planning, commitment and hard work. However, the benefits are well worth it. Follow the advice from this article to ensure all your bases are covered before you host your first guests. Once your rental business is launched, you will have the potential to yield high income and beat the competition, especially if you partner with a reliable rental property manager.
Related Read On Vacation Rental Business
1. What Renters Look For in Rentals: Tips for Landlords in Encinitas
2. All-Inclusive Vacation Property Management In Encinitas, CA
3. Investing In Vacation Rental In Encinitas? Read This First
4. Short-Term Rental Tips For Owners: Host Like A Pro
5. Vacation Rentals: How To Enhance Guest Experience
6. Vacation Rental Amenities That Will Wow Your Guests & Boost Your Host Status
About the Author
David Miller is Real Estate Advisor at Swell Property. Whether you’re eyeing a new home, an investment property, securing the best mortgage, or aiming to enhance your property’s value, my focus is on providing personalized guidance and strategy for your success. I listen to your needs attentively, ensuring that my expertise aligns perfectly with your real estate goals. My clients’ satisfaction and referrals are the true measure of my success in San Diego’s dynamic real estate market. If you’re searching for a real estate professional who’s deeply committed to your success, I’m eager to demonstrate my expertise and win your trust. Let’s connect and start this journey together.
