Vacation Rental Business – 6 Tips For Success

If you’ve wondered why I’ve been quiet the past few months, it’s because we’ve been busy: buying, renovating and setting up a brand new vacation rental business – The Hygge Suite. It’s been a dream of mine to get into property investment for a long time, and ironically we chose 2020, the year of COVID and chaos, to jump in. 

There’s a lot to learn in setting up a business of any type, including setting up a vacation rental business. We wanted to share what we learned in setting up our first vacation rental to help you by avoiding the same pitfalls. 

The Hygge Suite after renovation - our vacation rental business
The Hygge Suite – Our First Vacation Rental

1. Don’t underestimate how much stuff you’ll need to buy

After multiple IKEA trips and carefully stacked truck bed of stuff, it felt like we were students again, moving to university for the first time. We bought a fully furnished vacation rental, complete with furniture, knives, cork screws, and door mats. But that didn’t mean any of it was worth keeping.

It depends on the standard you want to set for your guests, and where you want to be positioned in the market. If you want to offer a budget bed for the night, then buying an existing vacation rental that’s a few years old and using the equipment it came with will probably be fine. However if you want to create a higher-end experience to generate more rental income, you’ll need to assess the condition of the existing items and take a call on whether you need to buy new.

The Hygge Suite before renovation
The Hygge Suite BEFORE Renovations

The place we bought had been a vacation rental since the 90’s and I don’t think much had been updated since then. We wanted to create a higher-end rental that would stand out, so we ended up replacing everything, even the cork screw!

2. Careful planning

If you’re buying a vacation rental in a remote place, or even one that’s not familiar to you, this will create some challenges. We bought our vacation rental in Northern Minnesota on a ski resort, with very few stores locally, and a three hour drive from the city where we live. We quickly found out that this required a lot of pre-planning. Add to that the challenges of COVID and it creates a project management nightmare. 

I highly recommend creating a project plan up front, and if you’re doing the work yourself, you’ll need to plan it down to every last detail. You don’t want to be running to the hardware store every five minutes buying that tool that you left at home. Not only does it waste time, but it also wastes money. Which brings me into my next learning tip – return on investment.

Look out for a blog in the near future on Project Planning.

3. Think like a business owner

Unless you’re buying your vacation home primarily for yourself and don’t care about the profit you make on it, you need to treat every decision you make as a business decision, i.e. what’s the return on investment. 

This means you need to save money wherever you can without jeopardizing the overall look you’re trying to achieve. It’s important to understand the market you’re in and the standard of decor and amenities that’s expected. If you’re trying to match the market and everyone around you has laminate countertops, then maybe you don’t need to splash out on quartz. But if you’re trying to appeal to a more premium market, and stand out from the competition then maybe quartz would help with that.

Quartz countertops at The Hygge Suite - our vacation rental business
Quartz Countertops at The Hygge Suite

There’s also the maintenance aspect. Quartz will likely outlast a laminate countertop as it’s scratch resistant, stain resistant and hardwearing. So you need to factor in the total cost of ownership, i.e. the upfront cost vs the replacement cost, and how long it will last. 

Some questions to consider when making decisions about your rental are:

  • How many nights does that take to earn back?
  • Can I charge more for having this feature / amenity / upgrade?
  • Does this need to be purchased new or can I buy this second hand and save some money?
  • Will I be upset if this gets damaged?
  • How often will I have to replace this?
  • Is this something that only I want? Or that guests would enjoy too?

4. Utilize smart technology

Being remote hosts, we explored ways to manage the property remotely. One thing we did invest in was a Nest thermostat, allowing us to control the temperature of the condo from anywhere, therefore saving money. This came down to the ROI decision I was talking about. We didn’t need to change the thermostat, the old one was working perfectly fine. The $250 it cost to buy though, plus the $100 rebate from our electricity provider, and the money it will save us from turning off the HVAC when we are not at the property, means it will pay itself back within the year easily. 

We also upgraded all the smoke detectors in the condo to Nest smoke and carbon monoxide detectors. Not only is it required by local code, but having these detectors in every room with remote capabilities gives us peace of mind to know what’s happening at our remote rental in case of emergency.

Nest thermostat
Nest Thermostat – Image Courtesy of Google Store

Another thing we considered was an August smart lock. This is a remote door lock that you can change the code from anywhere, and costs about $200 to buy. We decided not to go for one, even though we love the functionality. We already have a keypad lock on our door that is easily changed by our cleaning staff each time they clean. It only takes them about a minute, so doesn’t cost us anymore in cleaning fees. So for now at least, the investment doesn’t seem worth it. We’d love to hear from more experienced hosts though to see if you think differently!

5. Try it out yourself

Something we learned from the Thanks For Visiting podcast was to try out the rental yourself before renting it to others. Even though we’d been living there through the renovations, I’d still recommend this as a great idea. Live a day in the shoes of your guests. Can you reach all the glassware? Is it easy to find the trash can liners? Do you have enough space for all your clothes? It’s the little details that count, and having a small detail not considered can mean the difference in a good vs a bad review. Even better, have some honest friends stay at your place before you launch it to the general public. That way you get someone’s fresh eyes on it that you may not have considered.

woman reaching for something from a high shelf

6. Invest in marketing

Another thing we learned is that even if you buy an existing vacation rental business, you’re really starting from scratch in terms of marketing. The first year is probably going to be the hardest year in terms of raising awareness of the rental, and getting people to book a property with zero reviews. We listed on Airbnb and VRBO, because the research we did via AirDNA told us that 50% of guests booked through each platform in our particular location. And that’s great, but you can’t rely solely on these platforms to get your listing seen. 

I’d recommend you set up your listing on Google Business, Facebook and Instagram, and get your own website as a minimum. That way you can control your own destiny. Don’t be shy to talk about your listing on your own personal accounts to friends and family too. Word of mouth is a powerful (and free) tool that can help get your listing noticed and talked about in a potential pool of guests. 

You may have to spend some money on getting noticed though – make sure you have a marketing budget. Facebook and Instagram have easy to use ad tools where you can quickly and easily set up a paid ad for a few dollars that can potentially reach thousands of potential guests. Same goes for Google AdWords too. Research keywords, start testing, and see what works.

Look out for a blog in the near future on Marketing Your Vacation Rental.

Our vacation rental business journey

We’re only two weeks into our vacation rental business journey. Our listing The Hygge Suite went live to our first guests last weekend. We bought the condo 3 1/2 months ago, and since that time it’s been a wild ride. From living like students again, camped out on an air mattress for weeks. To having to adapt our designs due to availability issues with products caused by the pandemic. One thing for sure is that we’ve learned a lot, and we’re sure there’s still so much more to learn. 

Are you interested in setting up your own vacation rental business? Or listing that spare room on Airbnb? Or maybe you just did? If so, We’d love to hear about it, and what you’ve learned, or have questions about. Message us, or comment below. 

Thanks for reading!

Jo & Harv

@britflipper @thehyggesuite

3 fundamental flipping lessons

I had my first taste of property investing straight after graduating university in 2004. I was working full time and couldn’t believe how incredible it was to make four figures in my spare time doing something that I loved. I was hooked! Since that first property, I’ve bought and sold a further 5 properties in the U.K. and bought one in the U.S.

The first flip

I bought my first “live in flip” in 2004 straight after graduating for literally 0% down. (A live in flip is a property that is your primary residence that you fix up and improve whilst living there with the intention of making profit.) 0% down is unheard of in today’s conventional mortgage market, but at the time house prices were rising so fast that banks were pretty much guaranteed a safe return on their investment.

It was a terraced house built in the 1800’s, a former farm workers cottage, with two bedrooms, an upstairs bathroom (rare in this age of house, most were downstairs), a dining room, living room and a kitchen extension at the back of the house. It overlooked farmland and had a good sized garden/yard. We paid £84,950 for it, which was a fair price given it needed some updating. Comps in the area fixed up we’re around £90,000-100,000.

Having no budget means you need to be resourceful

We had pretty much £0 for the renovation. We were fresh out of university with student loan debt, and I was struggling to find a permanent job. So we did the project slowly, learned a lot of the skills ourselves, and roped in family members to help where we could. It taught me to be resourceful and to renovate on a tight budget. Skills that I still use today no matter how big my budget.

Every penny spent is a penny off the profit

Not only that though, but I always treated our live in flip as a business. Every penny I spent meant a penny less in profit. So any way I could cut cost I did. Whether that was doing the work ourselves or bargain hunting for cheaper products.

We probably invested about £3000 into the renovation and eventually sold it two years later for around £98,000. After fees we probably made about £7000 in profit. Not ground breaking by any means, but to get anything back for doing something I enjoyed doing was incredible!

Now I’ve learnt over the years that whilst this is true, I’ve also learned that sometimes if you invest more into the renovations you can expect to get more back. You need to understand what improvements they are by what your target audience values. Which brings me on to my next point.

Understand your potential buyer

House flipping uses some fundamental marketing techniques – understanding who your target audience is, and tailoring your product to their needs / wants. I.e. Understand who may potentially buy your house, learn about them and tailor your renovation to their needs.

How do you do this? There are a number of ways.

1. You can look at online reports of the demographics in your area. Such as ons.gov.uk in the U.K. and usa.gov in the U.S. This will give you a general overview of the types of people likely to buy in your area. For further links in the US, read this helpful blog post by Realtor.com. Or for the UK, this article by smartpostcode.co.uk lists 25 websites for further info.

2. Another way is to assess the type of home. Ours was a small entry level house, so we could assume it would probably suit a couple on their own or with one kid, as it was a little too small to be a family home for multiple people.

3. You can also assess it based on the location. Is it near to shops? A particular business? Is it in a student area? Does the area have fashionable shops and cafes near it? Who do you see walking around the neighborhood?

4. Also check out the nearby listings for clues. What do the houses look like near to it? What style of decor do they have? Industrial? Modern? Or more traditional? Does this appeal to older or younger buyers?

Once you have a good understanding of them find out what they like and what they value. You can gather lots of clues from doing a little bit of research. But also use the experts. Ask your estate agent/realtor about who typically buys these properties as they’ll have great insight. Also ask them what features a typical buyer values. This will help you to tailor your renovations to meet your customer’s needs and wants and produce a product that they want to buy. It will also help you maximize any profit. For example, there’s no point wasting extra money on installing quartz countertops if the potential buyers only expect laminate. However it depends on how competitive the market is and what your potential buyers value.

I think these 3 lessons I learned from doing my first live in flip have stood me in good stead through today.

  1. Know your audience and produce a product they want to buy
  2. Treat every penny spent as potential lost profit
  3. Even if you have plentiful budget, watch every penny and be resourceful. Shop around and do the work yourself where it makes sense.

There’s a lot more to flipping houses than just these 3 lessons. I’ll explore more as I continue to learn new things and reflect on what I’ve learned over the years. I’d also love to hear from you what your important learnings have been. Leave a comment in the comments section.

Thanks for reading,

Jo (@britflipper)

Five challenges you might encounter when starting out as an interior designer

So I took the plunge a few weeks ago – jumping in and starting my first real interior design job for some friends. It started when I posted on Facebook about finally getting my diploma in Interior Design and asking if anyone was brave enough to let me practice my new found skills on them. Low and behold someone stepped up!

A friend from our gym was wanting some help to refresh some rooms in their house and make it feel a little more coastal and pulled together. They had lived in Florida for a while and loved this style. They showed me pictures of room styles they liked and it was all very comfortable, light and bright. But this first project was not without its challenges.

1. Working with the existing.

Whilst their house had great bones being relatively new, and had a great amount of natural light. The challenge was the fact that their floors, kitchen cabinets and furniture were all dark. Most coastal styles have white or very pale wood furniture. Painting the cabinets white would be the obvious choice but understandably they weren’t keen on this when the kitchen was so new.

2. Making it child friendly.

This would be fine, except coastal is all about the pale fabrics. Not a good combination with black home-made slime projects! So I had a challenge to find hard wearing fabrics but still achieve the bright and fresh look.

3. The budget.

At first I thought I had a healthy budget for the three rooms they wanted redesigning. But it turns out that performance fabric sectionals are pretty expensive! I found the perfect linen loose cover style sectional for them from Pottery Barn until I realized I’d blown 70% of their overall budget on one piece of furniture! I learned a valuable lesson here, research the prices as well as the styles before proposing ideas to clients!

Sullivan Sectional, Pottery Barn

The other challenges I faced were more from a process standpoint rather than the design.

4. Underestimating the time it takes.

One thing that was a big learning experience for me is how long it takes to do these projects. Literally hours searching though websites to find the right products then putting it all into PowerPoint presentations with links to the actual products. I’m sure there must be better ways of doing this, and that’s something I need to find out from more seasoned Interior Designers.

5. Not having the right tools.

I also don’t have the right tools to do this job professionally, such as SketchUp, Revit or even Photoshop anymore. So I’m cutting pasting and cobbling together a design with PowerPoint and using free online 3D tools to try and visualize the design ideas as best I can. But it looks unprofessional in my opinion. So at some point I’m going to need to invest in the $1000’s to get the right tools and learn how to use them.

These are just a few of my initial learnings and challenges I’ve faced in starting out on my Interior Design side business. I definitely have a long way to go and am gaining a huge amount of knowledge and experience from helping out my friends. Keep reading my blog to find out how I work through these challenges to deliver a design they’ll love and streamline my processes.

Thanks for reading!

Jo